Saving in Cycles: How to Get People to Save More Money

18 Pages Posted: 13 Nov 2013  

Leona Tam

University of Wollongong - School of Management, Operations and Marketing

Utpal M. Dholakia

Rice University - Jesse H. Jones Graduate School of Business

Date Written: August 4, 2013

Abstract

Low personal savings rates are an important social issue in the United States. We propose and test one particular method to get people to save more money that is based on the cyclical time orientation. In contrast to conventional, popular methods that encourage individuals to ignore past mistakes, focus on the future and set goals to save money, our proposed method frames the savings task in cyclical terms, emphasizing the present. Across the studies, individuals using our proposed cyclical savings method provide an average of 74% higher savings estimates and save an average of 78% more money when compared to those using a linear savings method. We also find that the cyclical savings method is more efficacious as a result of greater implementation planning and lower future optimism regarding saving money.

Keywords: Cyclical time orientation, personal savings, implementation plan, future optimism, financial decision making

Suggested Citation

Tam, Leona and Dholakia, Utpal M., Saving in Cycles: How to Get People to Save More Money (August 4, 2013). Psychological Science, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2353158

Leona Tam

University of Wollongong - School of Management, Operations and Marketing ( email )

Building 40
Northfields Avenue
Wollongong, 2522
Australia

Utpal M. Dholakia (Contact Author)

Rice University - Jesse H. Jones Graduate School of Business ( email )

6100 South Main Street
P.O. Box 1892
Houston, TX 77005-1892
United States

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