The ability to accumulate does not depend on intelligence and willpower, but on external stimuli.
All people want to save, but not everyone succeeds. Wendy de la Rosa, a specialist in behavioral research, is researching habits that can lead to financial well-being. In his lecture on TED, she shares secrets that will help achieve this.
1. Plan Ahead
Wendy and her colleagues managed to find out an interesting fact: people tend to save much more if they plan it in advance, and not at the moment when the money is already in their hands.
After filing a tax return in the United States, part of the duties paid is returned to citizens, and usually this money is perceived as a pleasant bonus. Some spend it on spontaneous purchases, others use it for savings.
In the course of the study, which included two groups, people were found out which part of the returned taxes they plan to defer. It is noteworthy that those who answered the question immediately after receiving the return were going to save about 17%. But those who were asked even before the filing of the declaration (without confidence that there would be a return at all) called numbers from 17 to 27%.
Such a change in behavior is explained by the belief in oneself of the future as a more successful and capable person. The trick is to use this when planning your savings, fixing your obligations to yourself.
Say, if you set up a deduction for a deposit of a certain percentage from each salary, then you can avoid the temptation to spend money when they appear on the card.
2. Use Transition Periods To Good Effect
In psychology, there is a “clean slate” effect when motivation increases at the beginning of the year, semester, or before birthday. . This also works with accumulations, which is confirmed by another de la Rosa experiment.
Promoting a site for older people to rent housing, her team placed two ads on social networks aimed at the same audience – 64-year-old users. On the first banner was the text “You are getting old. Ready for retirement? Room rental will help. ”
On the second, they just replaced “You are getting old” with “You are 65 soon”, but this gave a lot more transitions and registrations.
This is the very “clean slate” effect, in which a call to action was a reminder of age. Such tipping points, when the motivation is very high, is convenient to use for making decisions about savings, preferably reinforced by their obligations.
Just add a reminder to the calendar the day before your birthday and set a financial goal
3. Monitor Frequent Petty Expenses
Studies confirm that most people regret the money spent on snacks and meals outside the home. Such small expenses add up to a tangible expense item and prevent saving. Taking them under control can fundamentally change the situation.
Wendy shows this by example. Living in New York, she spent over $ 2,000 on ride sharing, which was more than renting an apartment. The girl promised to save herself, but still gave the same amount until she changed her behavior.
She untied the credit card in the ridesharing application and added a debit card with a limit of $ 300 per month. When the limit expired, it was necessary to go through the procedure of binding a new card, which stopped Wendy from spontaneous spending.
You can do the same with other frequently recurring expenses – set an acceptable budget and make payment after exceeding it more difficult. Instead of calculating the limits, it is more convenient to use the limit on the number of spending . For example, Wendy allowed herself to use ride sharing only three times a week.
If you are interested in this topic, more details are in the original video lecture on TED.