Living with credit

Save more by changing the way you think: Go ‘Groundhog Day’

Kelly Dilworth

If you’re struggling to save more cash, you may want to try shifting your perspective. A new study published in the journal Psychological Science found that simply adjusting the way you think about how and when you’ll save can make a big difference in how much money you eventually sock away. Put simply, go “Groundhog Day” on your thinking if you want to save more.

Instead of thinking about the total amount of money you want to save down the road, for example, researchers found that it’s more effective to think about how much cash you want to save each month.

That’s because people who think about saving as a cyclical activity that they do over and over again tend to save more overall than people who think about saving as a long-term activity with a final goal at the end.

“In contrast to conventional, popular methods that encourage people to ignore past mistakes, focus on the future and set goals to save money, our proposed method frames the savings task in cyclical terms,” wrote Leona Tam of the University of Wollongong and Jesse H. Jones of Rice University in a study abstract. “Individuals who used our proposed cyclical savings method, compared with individuals who used a linear savings method, provided an average of 74 percent higher savings estimates and saved an average of 78 percent more money.”

The trick, say researchers, is to change the way you think about the passage of time — and about how long you have left to change your behavior. If you think about time as a straight path, leading from the past to the present to the future (which is what researchers call, thinking linearly) you’re more likely to develop an overly rosy view of the future and of your ability to save more later on. Since you have a while left before you absolutely have to meet your goal, you may put off saving money until you get a bigger paycheck or until you’re ready to retire in a few years (and by then, it could be too late).

You’re better off instead thinking about time as a cycle of events that happen over and over — similar to what happened to the actor Bill Murray in the movie “Groundhog Day.”
That way, you’re more likely to focus on concrete steps you can take now to change what happens the next time you try to build a bigger stash, say researchers.


In the movie, Murray’s character, Phil Connors, is forced to relive the same day over and over. Eventually, Connors begins using what he learned in earlier cycles to change his behavior and make better choices (which eventually helps him make over his life and win the girl).

Similarly, people who think cyclically about time tend to put more money aside so that their savings accumulate more quickly. They also tend to think more realistically about their savings and, according to the study, are significantly less likely to procrastinate.

“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 study co-author Leona Tam in a Dec. 20 press release. “Our research suggests a new, alternative method to personal savings that we hope will help to bridge this gap.”

Saving a high priority for most Americans
Indeed, research from Gallup suggests that Americans feel strongly about saving more money — particularly these days when the economy is still uncertain. In a recent poll, for example, 62 percent of Americans said they’d rather save their money than spend it.

However, the same poll also found that fewer Americans are curbing the total amount they spend. And even though 70 percent of Americans said they were spending less or about the same amount of money that they saved in previous months, the total amount of money that consumers reported spending this year has increased, according to Gallup.

“Although self-reported spending is up overall this year, with additional gains through Thanksgiving week, Americans don’t necessarily perceive themselves as spending more,” wrote Gallup’s Andrew Dugan in a news release. “However, the percentage who say they are spending less has declined substantially from where it was in the immediate post-recession period, including a peak of 57 percent in 2010. This suggests many Americans no longer feel much of the pressure to save that they felt during the recession.”

Perhaps these same Americans would be better off if they tried thinking about their goals in a different way. It’s easy to think abstractly about the need to save more cash. It may be more effective, however, to set concrete, monthly goals and to spend more time thinking about the present rather than the future.

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