How birth order affects finances

Of all the factors that affect your financial state, your birth order is probably the last thing you’d consider. But the personality variations that exist between oldest, middle, youngest and only-children may influence how you handle money. Traits associated with birth order – such as creativity, problem-solving skills and a lack of self-discipline – play a role in many aspects of life, including your finances. Read on to see how birth order influences finances.

  • Oldest child. Firstborns may tend to maintain good credit scores due to their hard work ethic, punctuality with paying bills and overachiever tendencies. Unfortunately, high expectations and perfectionism can lead to burnout in the work place, which could snowball into financial stress.
  • Middle child. Middle children tend to be inventive, creative problem-solvers who may be more inclined to shift a problem from one area of the finances to another, rather than eliminate it altogether. Although creativity can be a good thing, creative financing can lead to debt issues down the road. Middle children may also be less inclined to ask for help when they need it, choosing to hide financial problems from their family.
  • Youngest child. Youngest children – having grown up as the “baby” of the family – may take longer to understand the complexities of personal finance. They aren’t necessarily irresponsible with money in general, but they may tend to spend more socially and for vacations and entertainment.
  • Only child. Only children may learn life lessons earlier, having spent a lot of time around adults when they were young. The only child may be financially responsible, but prone to overspending.

Ways to get control of your finances

No matter what your birth order is, there are steps you can take to improve your finances. Incorporating these different methods, even one at a time, can help you progress toward your financial goals. You’ll gain peace of mind knowing that you’re working toward taking control over your spending and saving, rather than feeling as if your money controls you.

  • Prepare a personal budget. A basic budget should include your income and expenses. Getting these figures down on paper helps increase awareness so you can make better financial decisions. If you have trouble getting started, plenty of smartphone apps are available to help you create a budget.
  • Track your spending. You may not think a cup of coffee is worth writing down, but you’ll be surprised to see how much those little (and big) expenses add up to when you track your spending.
  • Reduce debt. If you’re going to do only one thing to improve your finances, start by reducing your debt. You may be losing thousands of dollars to finance charges every year. Consider meeting with a financial adviser if the task of reducing debt is overwhelming for you.
  • Start saving. Many people wait to start saving until they feel they can put away larger amounts of money. Start saving now, even if you can only save $5 a week. Over time, these little amounts add up, too.

Only one factor

While it’s clear that birth order may affect how you spend and save, it’s not the only factor that influences your finances. Awareness, education, honesty, accountability and discipline are also contributing factors. Although money management skills may not come naturally to all people, good habits can be developed to help you counteract any tendencies, habits or personality traits that pose a challenge.