5 Bad Money Habits That May Be Genetic

Penny Wrenn

By now we know that our genes determine more than just our height and hair color—they can also influence whom we love and whether we should wear deodorant.

But did you know that your genes affect many of the money decisions you make, too? From how immune you are to making impulse buys, to whether or not you’re prone to committing common investing mistakes, lately, researchers have been delving into just how hardwired our money habits are.

However, when it comes to your finances, biology isn’t destiny, so today we’re digging into the latest research—including a study which examined the money habits of hundreds of Swedish twins—to reveal how to turn what could be financial faux pas you’re born with into sound money habits instead.

Read on for five money mistakes your genes could lead you to make, and how to override those tendencies.

1. The Money Mistake: Overspending

What It Looks Like: Well, most of us know what overspending looks like, but according to Hersh Shefrin, lead researcher of a new report from Chase Blueprint called “Born to Spend? How Nature and Nurture Impact Spending and Borrowing Habits,” only 25% of us are born with what you might call the self-control gene that makes us immune to spending temptation. Luckily, if you know you have these tendencies, there are several ways to stay on the straight and narrow.

What You Can Do About It: In a recent article, “4 Ways to Trick Your Brain Into Banishing Bad Money Habits,” we outlined several science-tested measures that are surefire ways to curb unnecessary spending. For example, having a money mantra, like “I always take my tax return to the bank,” can help encourage you to use your purchasing power wisely, says Shefrin, who is a professor in the finance department at the Santa Clara University Leavey School of Business.

RELATED: 6 Times We Tend to Overspend

2. The Money Mistake: Putting All Your Eggs in One Basket

What It Looks Like: Recently, Stephan Siegel, a professor of finance at the University of Washington Foster School of Business published “Nature or Nurture: What Determines Investor Behavior?,” along with fellow researchers Henrik Cronqvist and Amir Barnea.

After studying the portfolios of identical and fraternal Swedish twins, they concluded that “a genetic factor explains about one third of the variance in stock market participation and asset allocation.” In other words, your genes could lead you to make several common portfolio mistakes, the first of which is not diversifying enough.