Are you an introvert or extrovert? Your personality type can affect your income and wealth — here's how

Introvert vs extrovert

From a psychological perspective, an introvert traits include:

• Being reserved
• Increased passivity
• Thoughtfulness
• Preferring to keep emotional states private

Socially, this results in introverts feeling more comfortable and energized in low-stimulus environments, a preference for one-on-one or small-group interactions, while also finding excessive social interactions draining.

On the reverse, an extrovert traits encompass:

• Sociable
• Assertive
• Cheerful

Generally, extroverts seek novel experiences and enjoy commanding attention in a group — they also thrive in social settings and become energized through interacting with others. They will often seek out group activities or public outings.

There is also the notion of an introverted extroverted — a person whose baseline personality is more akin to an extrovert with an introverted flair — and its reverse, the extroverted introvert.

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Ambivert vs Omnivert

Complicating the introvert and extrovery binary lies ambiverts and omniverts.

The former is understood as a person who can possess introverted and extroverted traits, depending on the circumstance they find themselves in. For example, an ambivert can showcase their more extrovert tendencies by find engaging with others in social situations easy, but they may also need to retread from the event to recharge their social batteries alone, a classic introverted trope.

An omnivert, on the other hand, does not fit into either end of the introvert-extrovert personality spectrum. They can display signs of extroversion and introversion and exist between the two polarities and can portray both personalities at the same time. Presenting their personality depends on the social setting they find themselves in, who they are speaking to and what type of situation they encounter.

Money psychology: Do extroverts tend to earn more than introverts

According to a study from the World Economic Forum, while education, skills and experience play a key factor in how much a person may make, personality type is also a factor.

Based on the Myers-Briggs Type Indicator, which assigns a binary value to four categories: introversion or extraversion, sensing or intuition, thinking or feeling and judging or perceiving, those with more extroverted-leaning personalities earn almost $10,000 more than their introverted counterparts.

Additionally, the research found that extroverts can acquire higher incomes if they are quick to share thoughts, have high energy and enjoy being in public-facing positions.

As a whole, entroverted thinking types have the highest earning potential of all, with 15% of people with an ENTJ (Extroverted, Intuitive, Thinking, Judging — also known as "The Commander") personality earn over $150,000 per year.

However, there is a gender bias in the ability for extroverts to earn more than introverts. The World Economic Forum study revealed that extroverted women earn, on average, $55,000 annually, compared to introverted men that make $64,000 on average.

The researchers surveyed over 72,000 people to measure these four personality preferences, as well as 23 unique facets of personality, income levels and career-related data.

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Low-income extroverts tend to spend more than introverts

Wendy Brookhouse, a certified financial planner and founder of Black Star Wealth in Halifax, N.S., finds that introverts are typically more likely to be savers, while extroverts are more likely to be spenders.

“Keeping up with the Joneses sometimes plays a role,” says Brookhouse. “I think that the era of social media … really does show a carefully curated section of what people are doing. And it's usually only the good stuff.”

“People will make assumptions around how much money someone has or think, ‘Oh, my God, they can do this. Why can't I do that?’”

However, she adds that there may be other factors at play as well, such as whether you rely on cash or credit cards to make payments. Studies show that people spend significantly more when they’re using credit cards.

Introverts’ spending and investing habits are also influenced by a lower risk tolerance when compared to extroverts. “This can be a strength if you think about overconfidence, but it can also prevent you from making investments that are risky, but have positive returns,” says Gensowski.

A 2017 U.K. study entitled "Personality, Income and Compensatory Consumption" in Psychological Science — the flagship journal of the Association for Psychological Science — found that low-income extroverts also may spend more on “high-status” items (such as golfing and international travel) than their introverted peers. Participants’ personality types were determined by completing a Big Five Inventory: a self-report designed to measure openness to experience, conscientiousness, extroversion, agreeableness and neuroticism.

“Some people would be inclined to engage in conspicuous consumption — wearing brand-name clothing, that kind of stuff — especially when you have a lower income,” says professor Blaine Landis. Landis, an assistant professor of organizational behaviour at University College London, who co-authored "Personality, Income and Compensatory Consumption."

“These feelings of self restoration can boost your own sense of economic standing among the people around you,” he says.

While the difference in personality types can be pronounced for low-income earners, the disparity is less pronounced among higher income earners, research also showed.

Tips for introverts

Staying conversative with your money, savings and investment style can reap dividends in the short and long-term, but you miss the chance of earning even more through investments if you don't take a leap of faith and broaden your scope. With the help of a robo-advisor or discount brokerage, you can have an accredited automated service or financial professional help you make calculated risks in a responsible way.

Tips for extroverts

Being bold and adventerous is in your nature — however, being able to rein that in a bit when it comes to your finances is important. Setting up a high-interest savings account will allow you to accrue a healthy level of interest on your contributions, allowing you to take risks elsewhere and still have a reserve of cash if need be.

Investing no matter what your risk tolerance level is

Regardless of whether your extroverted or introverted tendencies dictate how risky your approach to investing is, a robo-adivsor is here to help. Guided by an automated investment process and backed by strict government regulations that ensure fiduciary responsibility, a robo-advisor creates a hassle-free investment experience.

With Wealthsimple, the first robo-advisor on the scene here in Canada, a user-friendly investment tool with little human interaction is promised to all customers. The investment will build wealth slowly over time, choosing amongst eight to 10 exchange-traded funds (ETF) to get you there. You simply have to choose which portfolio you’d like: conservative, balanced or growth. Sign up for Wealthsimple and choose here you’d like to place your investments, whether it be a Registered Retirement Savings Plan (RRSP), Tax-Free Savings Account (TFSA) or others.

For those looking for an appealingly simplistic approach to investing, there's Moka. With automated contributions to the S&P 500, known for its solid average annual return of 10% over 65 years, this service is ideal for those seeking long-term growth without the need for active management. Sign up for Moka for just $15 per month and enjoy a more cost-effective service compared to traditional managed funds, which translates to significant savings over time.

Sources

1. World Economic Forum: "How does your personality type affect your income?" (Oct 21, 2021)

2. *Psychological Science*: "Low-Income Extraverts Spend More on Status Than Introverted Peers?" (Aug 23, 2017)