What would you do if you were stuck in one place and every day was exactly the same? If you’re Bill Murray’s character in the movie Groundhog Day, you could drive off a cliff with a groundhog or electrocute yourself with a toaster and wake up the next day without a scratch. On the other hand, if you’re trying to save money, you could significantly improve your account balance.
Thinking about time as a cycle of recurring experiences rather than a typical linear, goal-oriented approach may help people increase their savings, according to recent research published in Psychological Science, a journal of the Association for Psychological Science. Longer-term savings objectives often lead people to create abstract goals instead of clear plans on how to accomplish those objectives. They also encourage people to procrastinate by creating the mindset that there’s always tomorrow.
“Americans seem to understand and believe in the importance of having an emergency fund, back-up savings, or simply ‘money in the bank’ — and yet, savings rates are still low,” said psychological scientist Leona Tam of the University of Wollongong in New South Wales, Australia. “Our research suggests a new, alternative method to personal savings that we hope will help to bridge this gap.”
In an initial study with 157 participants, researchers found that people who took a linear perspective projected they would save less money in the next month than those who read about a cyclical method that focused on daily habits and routines. A second study with 145 adults found that participants who were prompted with a linear mindset and those who received no savings instructions only saved on average $130 to $140 after two weeks. In contrast, participants prompted with the cyclical mindset saved about $223, roughly 82 percent more than the other two groups.
“Financial advisers and institutions could incorporate the cyclical method in designing savings programs, and policymakers could consider the cyclical method in their fiscal and social initiatives to help citizens better manage their personal savings,” said Tam. “This could, in turn, lighten social welfare burdens in the long run.”
No one cares about your financial future as much as you do. There are always obstacles to overcome, but the sooner you start to take responsibility and find a way to place money aside for the future, the better off you will be. A cyclical approach to savings can be accomplished by focusing on your daily expenses and avoiding impulsive purchases, while also making sure to save money with each paycheck. Your weekly or monthly contributions may seem small, but you have to start somewhere. After all, tomorrow will come for most of us.
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