By Carol Church, Writer, Family Album
Reviewed by Michael Gutter, PhD, Department of Family, Youth, and Community Sciences, University of Florida
Do you “pay yourself first”? How’s that nest egg coming along? If the transmission goes, the roof leaks, or your kid breaks both arms falling out of a tree (hey, it happened to a family I know!), are you going to be ready?
For many Americans, these are uncomfortable questions. Our national savings rate is not looking impressive, having fallen from 11.2% of disposable income in 1959 to a measly 4.9% today. More than a quarter of us have no emergency savings fund at all.
Savings Help
How can nonsavers or minimal savers change their ways? The America Saves Campaign has three suggestions: set a clear goal, formally pledge to save, and set up an automatic savings plan. (Learn more about America Saves and enter contests to win savings money here.)
These tips and resources can certainly help get you on the right track. But did you know that your own emotions can also influence whether you save or not? It can be important to understand these hidden forces.
Emotions Influence Our Savings Decisions
In a recent study in the Journal of Consumer Research, experimenters used some simple tricks to manipulate whether people felt powerful or not, then asked them to make choices about saving money. They learned, as expected, that people feeling powerful generally do choose to save their money. Those feeling powerless often do not.
Simple Manipulations Affect Us
For instance, in one experiment, some participants wrote about a time they had power over someone, while others wrote about a time someone else had power over them. Then they were all asked to imagine they’d receieved a sum of money and to indicate how much of it they would put in a savings account. Those who’d imagined being powerful “saved” significantly more than those who imagined being powerless.
And in another experiment, some participants sat on a very high chair while being interviewed, while others sat on a low seat close to the ground. Then they were paid a small sum for their participation and asked if they wanted to put any in savings. Believe it or not, those who had sat in the powerful “high” chair saved more than those who’d sat low down!
How can we apply these findings to our own lives? Is it as easy as sitting in a really tall chair when we do our banking? These questions are a bit hard to answer, but it’s important to be aware of how our moods and thoughts can influence our financial choices, with effects that could last for years to come. For more tips on how to save up and save smart, visit America Saves.
(Photo credit: Tall chairs / Li-Ning Sports Park by Andrew Tseng. CC BY 2.0. Cropped.)
References:
Garbinsky, E. N., Klesse, A.K., & Aaker, J. (2014). Money in the banks: Feeling powerful increases saving. Journal of Consumer Research, (41), 3, 610-623. http://dx.doi.org/128.227.188.22
Malcolm, H. (2014). Americans still don’t have enough savings. Retrieved from http://www.usatoday.com/story/money/personalfinance/2014/06/23/americans-emergency-savings/11085869/
US Bureau of Economic Analysis. (2014). Personal savings rate. Retrieved from https://research.stlouisfed.org/fred2/data/PSAVERT.txt
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