4/18/2012 5:33 PM ET|
How birth order affects finances
Not only does it affect personality and career choice, your spot in the family can also affect your spending. Here's what you should know about yourself -- or your mate.
Have younger siblings? Chances are you're more interested in intellectual, cognitive careers -- such as medicine, law, accounting and engineering -- that offer larger paychecks than your younger brothers and sisters have. They may be drawn to artistic and outdoor-related careers.
Chances are you also had your fair share of fights in the back seat, too.
Besides determining who gets the window (or the middle) seat, your birth order also has a lot of pull with your finances. Derrick Kinney, an Ameriprise financial adviser at Derrick Kinney & Associates in Arlington, Texas, says your birth order can affect your relationship with money and how adeptly you manage your credit score. Being the oldest, the youngest or somewhere in between can affect how high your credit score might surge or how much debt you're likely to rack up.
A few tricks of the trade can help keep your birth order from dragging down your credit score and keep you from piling up a mountain of debt. Here's a look at what you need to know to stay out of the financial middle seat.
Firstborns are typically fiercely responsible, says Dr. Soroya Bacchus, a psychiatrist in Los Angeles.
"They're the most punctual about paying bills, because they love to be seen as stable and dependable," says Bacchus. "They won't let financial details like payment due dates and avoiding unnecessary over-the-limit fees fall through the cracks."
Bacchus says firstborns are also phenomenally organized and "keep their finances in order." So they often have great credit scores.
"Thirty-five percent of your FICO score is based on paying bills on time. So being responsible helps your credit score," says Chris Dlugozima, a certified consumer credit counselor at GreenPath Debt Solutions in New York.
But all that perfectionism and drive of being the first in the birth order can backfire.
"More often than not, being a perfectionist leads to burnout and giving up or setting unrealistic financial goals," says Kinney. "That may sabotage your finances."
Temper your traits: Instead of setting an unrealistic long-term goal like tripling the amount you put into your 401k every month, Kinney suggests setting attainable short-term goals.
"Middle children are inventive, natural problem-solvers. They grow up thinking they can handle anything themselves, including money problems," says Bacchus.
"Being inventive can result in constantly moving debt around between different cards through cash advances and balance transfers," says Dlugozima.
Bacchus says it also makes middle children prone to secrecy. "Inventing" ways to a pay a bill or to afford an impulse splurge can create the need to cover up -- or ignore -- financial troubles.
A secretive side can mean middles are more likely to hide financial troubles such as unpaid bills and accounts sent to collection from their spouses. They believe they can fix the problem themselves. Dlugozima says when a middle child and his spouse seek a mortgage or loan together, a middle's in-the-dark mate may be blindsided with a rejection because of the money-hiding middle's secret poor credit scores.
Temper your traits: Kinney says soul-searching helps resist the temptation to be secretive.
"If it's embarrassing or disappointing to not have enough money so you get creative, (then) instead of secrecy, work together to create a mutual plan to turn your finances around," he says.
More from Bankrate.com:
- 5 tips for raising money-smart kids
- When to cut the financial cord on your kids
- When having a baby if financially doable
Baby of the family
Bacchus says babies of the family are very social and tend to prioritize dinners out with friends, latte runs and trips to the mall over budgets. This sometimes leaves little or no money to pay bills.
It's tough for those youngest in the birth order to spot these activities, which are the first ones to cut if you're in a budget crisis, says Kinney. "A social youngest child will have problems learning to value saving long term over the instant gratification of a social event," he says.
"Parents often dote on the youngest children, so they're conditioned to rely on others. They get into financial trouble because they can't handle responsibility and may even believe someone will fix their financial problems if their parents have paid bills for them," says Bacchus.
Temper your traits: Look for ways to spend less while still being social. Go for coffee instead of dinner, or rent a movie with friends instead of having dinner and a movie out.
"Start a 'social fund,'" says Rachele Cawaring Bouchand, a certified financial planner and the director of financial planning at Clark Nuber P.S., a CPA firm in Bellevue, Wash. That way it'll be easy to see how much money you spend on social outings.
Only children and firstborns tend to share most birth-order-related traits. "Like firstborns, only children are perfectionists who are generally very responsible," says Bacchus.
But in addition to paying bills on time and generally having a good (or great) credit score, Bacchus says only children also tend to seek approval from superiors and people older than they are.
"This could lead to trying to impress people at all costs, even if it means living beyond your means," says Dlugozima.
Temper your traits: Bacchus says it's easy to get caught up in all that impressing, especially if it seems to be working. After all, who doesn't like to be liked?
Bacchus says only children should slow down and evaluate things. In other words, take a breath.
"Look at your relationship with the person you're trying to impress," Bacchus says. "If it's a one-way street where you're always shelling out cash just to impress and you're not being equally wooed, it's time to turn your attention elsewhere. Put your money toward a reward with long-term benefits like a paid-off credit card or padded nest egg."
More from Bankrate.com:
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Not even close to the truth. I am the Youngest of 5 and I am the only one who is financially stable. It's not about birth order, it's about choices. No matter what order you were born, you chose you financial fate.
This is 100% wrong in regard to the family I grew up in, and with my own children.
It all actually works in the opposite.
who writes this crap...rates up there with the dummest artical i have wasted time reading.
BUNK. My older sister is not any better at managing money than me or the other two siblings in our family. We all learned from our parents to be responsible and pay our bills on time. AND to save. Pointless article.
I'm the middle child. We are the ones no one pays any attention to at all. I think of myself as the surviver. I'm always employed, never in trouble , own a home, "the only one of the kids who does". But it is never as important as the baby's issues, and the oldests need to control everyone. I like just floating along in my world.
I definitely agree with the other posts. This article has it wrong. This article doesn't represent me and my siblings, nor does it represent any of my friends and their siblings.
Seriously, where does MSN find these writers? And how minimal do their qualifications have to be?
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