Personality Traits and Personal Financial Planning Behavior: Does Mental Accounting Matter?

Abstract

This study aims to analyze the relationship between the Big Five Personality Traits and Personal Financial Planning (PFP) behavior, with a particular emphasis on the mediating role of Mental Accounting among employees working in the service sector in Indonesia. Research data were collected through a structured questionnaire distributed to 200 service-sector employees selected using purposive sampling. Subsequently, a quantitative approach using Partial Least Squares Structural Equation Modeling (PLS-SEM) was employed to examine the relationships among the proposed variables. The findings reveal that Extroversion, Conscientiousness, and Neuroticism have a positive and significant effect on Personal Financial Planning, whereas Openness has a significant negative effect. In contrast, Agreeableness does not have a significant effect on Personal Financial Planning. Furthermore, the mediation analysis indicates that Mental Accounting significantly mediates the relationship between all dimensions of the Big Five Personality Traits and Personal Financial Planning. These findings suggest that employees' personality traits influence their financial planning behavior not only directly but also indirectly through their mental accounting practices. This study contributes to the behavioral finance literature by highlighting the importance of personality traits and mental accounting in improving individuals' personal financial planning behavior, particularly among service-sector employees in Indonesia.

Keywords: Big Five Personality Traits, Mental Accounting, Personal Financial Planning, Behavioral Finance, PLS-SEM.