The Big Money Test - results

Man emptying wallet on a table

The results of BBC Lab UK's Big Money Test show that there is far more to managing your money than financial know-how. Here Professor Adrian Furnham, Professor Mark Fenton-O'Creevy and Dr Sophie von Stumm reveal what they have learned from the test, launched in April 2011 by money saving expert Martin Lewis.

Why are so many people confused when it comes to managing their money? Huge efforts go into providing people with information to help them manage their money successfully. But these schemes have limited success.

We believe that many factors come into play when we make decisions about money. These include our emotions, beliefs and motivations, as well as our money habits, access to information and financial knowledge. We created the Big Money Test, to unpick how these factors make up our complex relationship with money.

Martin Lewis's money saving tips from The Big Money Test

Thanks to the more than 109,000 people that took part, this is one of the largest studies of money psychology ever.

What did we learn?

For the first time ever, we looked at the relationship between how money makes us feel (money motivations), financial capability and money problems. Our results show clearly that there is more to how we manage our money than financial capability. These are our key discoveries:

  • While financial knowledge is important, our emotions play a big part in how well we manage our money
  • Money makes many people feel worried, guilty and anxious
  • Impulse shopping can lead to disastrous financial problems
  • If money makes you feel powerful you are more likely to encounter money problems, but if money makes you feel secure you are less likely to
  • Being able to make ends meet is crucial for us to be able to manage our money well, more so than financial knowledge
  • Attitude to money and financial success tend to improve with age, even more so for men than women

Read on to find out about the results in detail.

Money makes me feel bad

Woman looking at a pile of pound coins

We looked at negative emotions people associate with money and discovered:

  • Over 40% of people said they constantly worried about spending money
  • Half agreed that they resent paying the full price for goods in shops
  • Nearly half said they were flooded with guilt and anxiety when they asked for money
  • Over a third said they felt anxious when spending money on themselves
  • A third said they thought about money all the time

These results show that money generates powerful negative emotions. To help people improve their financial capability, we need to tackle people's emotional relationship with money - help them feel more positive and confident about it - if we are to succeed in helping them improve their financial capability.

Impulse buying

Graphic showing that women and under 21 year olds are most likely to impulse buy and that 62% of supermarket profit comes from impulse buying

We've all done it. You only needed a pint of milk, but on the way out you spot those chocolates on offer and it seems too good to miss. Impulse buying can give us a boost, but what is it doing to our finances? Consumer research often argues that impulse buying is harmless or even a good thing, as it saves us time. But the Big Money Test reveals that for some people the results can be disastrous.

People who bought goods impulsively were three times more likely to go bankrupt, and four times more likely to run out of money by the end of the week. And impulse buying has a greater impact on our ability to make ends meet than financial knowledge, income, education and social class combined. As it can lead to financial problems, is it ethical for retailers to encourage us to buy things on the spur of the moment?

Our results suggest that people who shop impulsively do so to manage their emotions - to make themselves happy, or to stop feeling sad. This may be because they find it hard to manage their moods in other ways. If you recognise that you shop impulsively, you could help avoid potential money problems by adopting new ways of managing your emotions.

Security and Power

Money motivations

Psychologists have identified four types of money motivation:

  • Security - the extent you use money to feel safe and to avoid feeling anxious about problems you may encounter in the future
  • Power - the extent you use money to achieve power and influence over others
  • Love - the degree to which you use money to buy people's affection
  • Freedom - the extent you use money to do the things you enjoy in life

We wanted to know how the way you feel about money (your money motivation) affects your chance of suffering financial problems.

We found that if money makes you feel powerful you are more likely to encounter financial problems, perhaps from buying status symbols beyond your means, while those who get security from money were less likely to struggle with their finances.

If money gives you a sense of security it could push you to develop the financial skills you need to save and avoid financial crises. Encouraging positive money motivations, like security, should be used to help improve people's financial capability.

Making ends meet

We looked at financial capability, which is how good you are at:

  • Making ends meet every month
  • Planning ahead for the future
  • Keeping track of your finances
  • Staying informed about financial developments, such as interest rates and house price fluctuations

The Big Money Test results reveal that the skill of making ends meet makes you less likely to suffer money problems. Staying informed about economic developments helps, but to a lesser degree.

If you have a low income and find it hard to make ends meet, it makes sense to keep track of your finances and plan how you spend your money carefully. And we found that people who earn less had higher scores for keeping track.

Man using a calculator

Surprisingly, we found that people who are good at keeping track of their finances or planning ahead for the future are more likely to have financial problems. One likely explanation for this is that when people first encounter money troubles they start to monitor their finances closely, to avoid falling into a deeper financial trouble.

As we expected, our results have shown that how well we manage our finances (financial capability) and what money means to us (money motivation) both affect how well we manage our money.

Good financial capability is linked to higher levels of income and education, while money motivations are not.

Gender and age

The Big Money Test revealed some distinct differences between men and women and people of different ages:

  • Women tend to be worried spenders and shop as a form of therapy to manage their emotions
  • Men are more likely than women to associate money with freedom and the ability to achieve goals
  • Men tend to feel that money provides security and so are more likely to save, or even hoard their money
  • Women are much more generous with their money; this was the biggest difference between the sexes
  • Women are more likely to suffer from (or admit to suffering from) money problems
  • Impulsive shopping tends to decrease with age
  • Unexpected overdrafts and refusal of credit are most common for people in their twenties
  • Bankruptcy and other serious money problems tend to happen later in life

Unexpected life events

Graph showing how major life events can lead to financial problems

Redundancy, major illness and child birth (or adoption) all tend to increase our risk of financial problems and reduce our ability to make ends meet each month. But recent retirement leads to improved financial health. This is likely to be thanks to good financial planning to cope with a lower retirement income.

Our results suggest that your emotional relationship with money makes a big difference to whether an unexpected life event will lead to major financial difficulties.

Frequency of financial problems

Denial of credit or unexpected overdraft were the most frequent money problems (about 25% of the sample), while bankruptcy and car or house repossession were comparatively rare (less than 1% of the sample). These proportions are comparable with nationwide data provided by the Consumer Credit Counselling Service, 2012.

Who took part?

A total of 109,472 people (55% women, 45% men) participated in the experiment. The sample was predominantly white British, had an average age of 40 and a mix of educational attainment.

All participants defined themselves as working or middle class. More than 60% were working full-time and the same proportion said they were the major wage earner in their household.

The people who took part in this online experiment don't represent the UK public as a whole. However we were able to use the data collected to generate meaningful results about the relationship that people have with money. Read an article from BBC Lab UK's Big Stress Test to see how we can get valid results from an online survey.

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