Trust in time affects your savings

How can we help people save a lot of money?

An interesting article by Leon Tam and Utpal Dholakia (February 2014) on Psychological Science said that people's beliefs about time can have a big impact on how much they save.

Many people (especially from Western cultures) tend to think of time as a straight line. People point a point on that line and call it the present. Behind it is the past, and in front of it is the future. Because the future is far away, many approaches to help people save more money are the design of how to make people feel like the future is closer to the present. The point is that when people realize they have to help their future selves, they will be more likely to spend money to help them achieve their future goals.

However, those techniques often fail. People who see their future selves may need help, but they are also optimistic that they will make more money in the future and therefore they will save more money in the future than they do now. in.

Tam and Dholakia point out that people also think about time from the point of view of cycles. People know that the days of the week repeat, and the seasons repeat every year. When people focus on those cycles, they can realize that their lives do not change much from cycle to cycle. As a result, if people do not save money in the present, why should they believe they will be in a different situation in the next cycle?Researchers believe that making people focus on the cyclical nature of time can make people increase their savings, because they realize the future will not be much different than the present. .

In one study, adults aged 19 to 55 were placed in one of three experimental conditions.

A group is asked to think of time as a cycle and recognize the cycles of repetitive life. They were told that if they did not save money now they could not be in another situation the next time this cycle appeared.

The second group is asked to think of time as a straight line. Their goal is to save money to help their future ego stay in a better position to achieve their goals.

The third group does not receive any specific instructions on time.

After that, participants predicted how much money they would save over the next 2 weeks. After 2 weeks, participants were contacted and said how much money they saved in that time.

Participants under controlled conditions predict they will save $ 133, and in fact they save $ 81. Those who were asked to think of time as a straight line did not save much. They expect to save $ 140, and actually save $ 118. The group was instructed to think of time as a cycle that saved better. They expect to save $ 233 and actually save $ 216.

Other research by the authors has expanded the study in two ways. First, participants are either asked to think of time as a straight line or as a cycle. They make predictions about how much they will save this month and how much they will save in a year from now. Those who were asked to think of time as a cycle predicted they would save more this month than those who were asked to think of time as a straight line. This repeats previous research. However, those who were asked to think of time as a straight line predicted that they would save more money in a year from now than those who were asked to think of time as a cycle. That is, people who think of time as straight lines are more optimistic about their ability to save money in the future than those who are asked to think of time as a cycle.

Finally, people are asked about their ability to save money. People who are asked to think of time as a cycle show more confidence in their money-saving plans than those who are asked to think of time as a straight line.

What does all this mean?

We are often optimistic about the future. In the future, we believe that we will earn more money, resist temptation better; We assume we will eat better and exercise more often. But in reality, the future is often very similar to the present. There are always temptations to spend money, eat too much and hide exercise.

Focusing on life cycles helps people become more realistic about the future as it is now. Achieving future goals requires you to act now.