THE INFLUENCE OF BIG FIVE PERSONALITY TRAITS ON FINANCIAL RISK TOLERANCE ACROSS GENERATIONS IN THE COLOMBO AREA

Abstract

"This study investigates the influence of the Big Five personality traits—openness, conscientiousness, extraversion, agreeableness, and neuroticism—on financial risk tolerance across generational cohorts in Sri Lanka. The aim is to understand how personality traits shape financial decision-making among Generation Z (12–27), Millennials (28–43), Generation X (44–59), and Baby Boomers (60–78). A quantitative survey was conducted with 400 participants, evenly distributed across the four generational groups. Correlation and regression analyses were applied to examine the relationships between personality traits and financial risk tolerance. The results reveal significant generational differences in financial risk tolerance and associated personality traits. Extraversion and neuroticism emerged as the most influential predictors. Extraversion was positively correlated with financial risk tolerance across all generations, while neuroticism showed a consistent negative correlation. Younger generations (Gen Z and Millennials) demonstrated higher openness and extraversion but reported lower levels of financial risk tolerance. In contrast, older generations (Gen X and Baby Boomers) exhibited higher conscientiousness and lower risk tolerance. The findings confirm that personality traits, particularly extraversion and neuroticism, significantly influence financial risk tolerance across generations. These insights suggest the importance of incorporating personality and generational characteristics into financial advising, product design, and educational initiatives. Future research should explore additional psychological variables, such as financial literacy and self-control, and consider cultural influences on financial behaviour.