Living/Money Management

The Counterintuitive Mental Habit That Makes You Save More Money

By | Friday, March 06, 2020

If you’ve ever found yourself struggling to meet financial goals, you’re not alone. And as it turns out, our emotions play a large role in our ability to save and stick to other financial goals.

A recent study looked at how much our emotions impact our financial behaviors. Researchers created two test groups. They presented one group with a financial education presentation of about 30 to 45 minutes that included topics like retirement, savings methods, and compound interest. Then they gave the other group a sentimental savings session and required that each participant bring a sentimental item to the session. During the presentation, participants had to think about how the feelings and values brought on by their sentimental item could also help them achieve their financial goals. 

The sentimental group fared better. Not only did they retain more financial knowledge, but they also had a better overall savings rate. Three weeks after the study, the sentimental savings group had also increased their savings by 73%, while the financial education group only reported a 22% increase in savings — that’s a huge jump that just goes to show how much of personal finance isn’t about math or numbers, but emotions, habits, and behavior.

Researchers found that one way to increase a subject’s emotional tie to a goal was by asking them to visualize the goal itself. For example, if you want to pay off your student loan debt, ask yourself, “What does being student loan debt free mean to me?” or “What would I do with my time and money without student loan debt?” In other words, creating meaningful, emotional connections to your goals will better help you achieve them.

While the study itself was relatively small, the findings are significant. If you find yourself struggling to meet a financial goal, try tying it to a strong emotion to it. And sentimental items might serve as symbols of success, too. A gymnastics trophy that reminds you of how hard you worked and what you were able to accomplish can be a useful reminder that you can do that with your financial goals, too. 

It’s easy enough to create a goal — sticking to it is another story. Approaching your finances purely through reason is sure to be difficult, so learn to embrace your emotions and, if the research is any indication, your financial goals will be a little more attainable.

Simplicity Bryan is deeply entrenched in the worlds of self-help, gratitude, personal finance, and organization. She’s happiest paddleboarding with her pup and storytelling with a purpose. You can follow her here.

Image via Pexels

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