Being too nice can be bad for your money



Myles Ma

Myles Ma

Senior Managing Editor

Myles Ma is a health care expert & personal finance writer for Policygenius. He edits the Easy Money newsletter.

Published February 5, 2019|2 min read

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You were probably encouraged to be nice when you were growing up. If you hit another kid or teased them you'd hear, "Now, be nice." But, a new study reveals that in the long run, being nice can actually leave you worse off financially.

Why nice people are worse with money

The study, published in the Journal of Personality and Psychology, found nice people tend to care less about money, said Sandra Matz, an assistant professor at Columbia Business School and an author of the study. The study examined multiple sources of data, including a comprehensive survey that followed more than 3 million participants for 25 years.

Matz and co-author Joe J. Gladstone found an association between people with "agreeable" traits — like trust and altruism — and indicators of financial hardship — like lower savings, higher debt and higher default rates.

In addition, people who showed high agreeableness on personality tests as teens tended to have worse financial outcomes later in life. Matz and Gladstone hypothesize that placing too little value on money leads nice people to make bad financial choices.

So, should everyone be mean?

"What I don't want to do is tell nice people that the only thing you should care about is money," Matz said.

But caring more about money can help you be a more caring person.

"If you think about financial distress, basically not caring about money and mismanaging your money also has negative repercussions for your loved ones," she said.

If you have people you love who depend on you, you have to care about money to make sure you can care for them. Agreeable people can often be more generous with their money, but not in an intentional way. (A proper budget could help with that. Get started with this easy spreadsheet.)

Can nice people get better with money?

"It's actually a really sad story because agreeable people are the people you want in a society," Matz said.

Agreeable people are like a social glue. They help their fellow citizens. They make sure society works toward shared goals. Matz hopes further studies can find ways to help agreeable people get better with money.

Matz is currently studying how other personality types handle money as well. The evidence increasingly shows there's no one-size-fits-all financial strategy for everyone. Even common-sense advice like "save more money" needs to be tailored for each person, since each person will have different goals for that money, Matz said.

"That's basically what marketing is all about," she said. "Trying to figure out what motivates people."

One skill nice people might want to take up: negotiation. Learn how you can haggle your way to a better budget here.

Image: svetikd