The Surprising Link Between Birth Order and Financial Behavior

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What would you say if I were to tell you that I’m an only child? What assumptions would you make about me with this bit of information?

Here are a few stereotypes typically assigned to an only child: selfish, spoiled, needs to be the center of attention. On a positive note, some other stereotypes are: mature, independent, high achiever.

Rather than clue you in on what does and doesn’t actually describe me, I’d like you to think for a minute about your birth order. Are you an only child like me? Or are you a firstborn, middle-child, or last-born? What kinds of things have people assumed about you in life based on this status?

Whether we like it or not, our birth order affects pretty much every aspect of our lives – finances included. And not only that, it can also be a big part of what shapes our relationship with money. Not just how we spend our money, but also how we use it to position ourselves in the world.

(So if you find yourself constantly plagued with a desire to keep up with the Joneses’, know that there could be some environmental reasons as to why!)

Why does this matter, you ask? Because the more insight you can glean into your relationship with money, the better you can improve it. So, let’s dive into the world of birth order to find out its true impact.

The Birth Order Effect

The idea that our birth order has a profound effect on our behavior is nothing new. In fact, it’s such a common topic that there are stereotypes for each one:

Only children are spoiled.
Older siblings are control freaks.
Middle children are desperate for attention.
The baby of the family needs to be the star of the show.
Twins are basically one person.

The problem is, none of these stereotypes are even remotely positive. So I decided to do a little research to move beyond the negative assumptions. I found an article by Jocelyn Voo in Parents.com that addresses the specific characteristics you may find with each birth order. Here’s a summary of what Voo discussed.

Firstborn
Mini-adults. Reliable but cautious, controlling but conscientious. Diligent and has a deep desire to please the adults in their lives. As firstborns grow to adulthood, these traits lead to an ambition that enables them to become high achievers (and, as seen in other studies, high earners).

Middle Child
The overlooked child. People pleasers and peacemakers. Feeling lost in the shuffle of the family leads them to develop strong social circles to substitute for that sense of belonging. As adults, they can harbor a rebellious streak developed early on.

Last Born
The free spirit. Having more experienced and thus less worrisome parents allows last borns to be more fun-loving and uncomplicated. But they may also desire to be the center of attention and can exhibit manipulative behavior. As they grow into adulthood, last borns often exhibit more spontaneity than their elder siblings.

Only Children
The “super firstborn”. Only children have the most time and attention from their parents. This closeness with adults can lead to a high maturity level early on. It can also create a feeling of high parental expectations, causing them to be more perfectionistic – a trait that carries on into adulthood.

In the Parents.com article, Voo also goes on to describe the special tendencies of twins (one or the other will always take on the role of first or last born), gap children (closer to a firstborn personality type), and adoption (traits will depend on the age at which they were adopted).

While these traits can teach us a lot about our own behaviors, they can also inform the way we interact with one another…

Positioning: How We Use Our Economic Status to Make a Statement About Ourselves

In researching how birth order affects our relationship with money, I came across a study done by Elina Lampi and Katarina Nordblom. They too sought to learn about the impact birth order can have; but they focused on the impact it has on positional concerns.

Positional concerns are essentially the way we use our money and success to portray a specific view of ourselves to the outside world. So that emotional relationship with money that we all have? We take it to even higher levels by using our economic status as a measuring stick to those around us. Explaining many people’s need to “keep up with the Joneses”…

The question is, why do we position ourselves? And are those of different birth orders more “positional” than others? Lampi and Nordblom sought to answer these very questions.

How Our Birth Order Does (or Doesn’t) Lead Us to Care About Positioning Ourselves

In 2008, economists Elina Lampi and Katarina Nordblom conducted a survey to learn more about how people position themselves in society. In their words,

“Survey data is used to investigate how birth order and having siblings affect positional concerns in terms of success at work and of income.”

Out of the 2,291 individuals surveyed, 35% were firstborns, 19% were middle children, 35% were the baby of the family, and 6% were only children. Another 4% had siblings but didn’t grow up with them (which turns out to be a pretty important factor in the results).

As I read through this study, I expected to learn specifics about money behaviors based on birth order. Instead, I was surprised to find that the respondents were more or less positional based on their level of comparison with their siblings. And this was impacted more by their “sibship” than by their birth order:

“The birth order variables are not important in explaining the relative comparison with siblings. Rather the characteristics of the sibship, such as the number of siblings, their gender composition, and especially whether a respondent perceives that he/she has often been compared with his/her other siblings, are of greater importance.”

So one’s “sibship” (or lack thereof) had a far larger impact on the respondents’ positional concerns than their birth order. Here are more details about the findings of the survey:

1) Only children and children who didn’t live with their siblings are most likely to have strong positional concerns.

The only children and gap children of the survey were most likely to be positional. Part of the reason for this is the feeling of pressure and of having high expectations to live up to. The only children and those not brought up with their siblings also felt a greater need to become more successful than their parents, as they compared themselves with their parents more often than children with siblings would do.

2) The amount of positional concern you have, regardless of whether it’s to your peers, parents, or siblings, will grow based on the number of siblings you have.

Respondents of the survey who were raised in large families were more likely to compare their success and money to those around them. However, when it comes to being positional to parents specifically, the middle children were less positional – likely due to the feeling of not having as much attention (and therefore expectation) from their parents and comparisons to their parents.

In short, only children are highly positional due to a feeling of being compared to their parents. Children with a higher number of siblings are highly positional due to having more siblings to feel that they are being compared to. But of all children, middle children don’t feel they have as much attention, which removes the feeling of being compared to their parents or their siblings, and are therefore less positional.

3) Those who felt that they were being compared to their siblings during childhood will have a higher positional concern.

Firstborns’ have a natural leadership position. But the firstborn respondents of the survey also felt more like they were compared with their younger siblings growing up. Thus, they had a higher positional concern than their younger siblings (similar to that of only children and children who grew up without their siblings in the home.)

4) Your gender in comparison to your siblings will impact your positional concerns.

Respondents of the survey who grew up in a family of same genders were more positional due to the fact that they grew up with like siblings that they could easily be compared to. This can be further exacerbated if the siblings are also very close in age.

Shannon
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Your Early Childhood Years May Affect You More than Your Birth Order

The conclusion of this survey found that the respondents’ early childhood years were far more impactful to their positional concerns than their birth order was. In Lampi and Nordblom’s words,

“In summary, we have found that the early childhood years matter for how much a person cares about relative income and relative successfulness. The family environment in which a child lives and how the parents treat him/her do affect the strength of his/her positional concern as an adult. This might in turn affect educational and work related choices, as well as how people as adults deal with comparisons
with others.

While that’s not so great news (since we have no control over what happened during our childhood years), another finding is much more positive. The youngest group members in the survey (25 year olds) were far more concerned with positions than the oldest group members (40 year olds). In other words, as we get older, we become less positional. Adding truth to the phrase, older and wiser, this is a positive sign for those hoping to improve their relationship with money and distancing themselves from keeping up with the Joneses.

Final Word (Because I’m an Only Child and Therefore Need To Have the Last Word ;) )

Ultimately, no matter what your birth order, you can take control and have a positive relationship with your finances. We’ve written before about how to overcome mental barriers that can obstruct your progress, and we also have several resource centers that cover a wide range of financial advice. These can help you make sure you are on the right track – regardless of birth order!

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  • http://fitnpoor.com Michelle

    This was a very interesting post. I am the middle child, but I am less than a year from my younger sister. I do think that my sister was always the star of the show, but they also treated us like twins for most of our childhood.

    • Shannon_ReadyForZero

      Thanks! Yeah, I always wondered that about children who grew up so close in age. I’m an only child myself so the whole sibling relationship was largely a mystery to me for most of my life.