Overactive, overwrought or overdrawn? The role of personality in undergraduate financial knowledge, decision-making and debt

The financial situation of undergraduate students remains a high-profile issue within the UK higher education sector, not least due to its perceived relationship with retention, well-being and success. This paper probes this question from a new direction, using concepts and approaches from the field of applied psychology to examine how students use various forms of credit and whether personality impacts on borrowing behaviour. The sample in this study comprised 604 undergraduate students at a large UK university. Data was collected by online questionnaire on demographic background, borrowing history, borrowing intentions, financial literacy, personality type and attitudes to money. Using a series of regression analyses, it was found that a tendency towards extraversion was particularly associated with the use of overdrafts and borrowing from family members and that this led to higher anticipated debts on graduation. Neuroticism was found not to have any significant relationship to borrowing behaviour, but it was a significant predictor for student anxiety about money management. The paper also reports related findings concerning students‟ learned borrowing behaviour, the acceleration of student use of commercial borrowing during their course of studies and about the construction and implications of financial literacy. Corresponding Author : Neil Harrison, Senior Research Fellow, School of Education, University of the West of England, Frenchay, Bristol, BS16 1QY. E-mail : [email protected]. Telephone : 0117 32 84190.