When facing a choice between a smaller dollar amount now or more money weeks later, “patient savers” focus immediately on the two dollar amounts, quickly screening out other factors as irrelevant, according to a new study.
Then they make a rapid choice in favor of the higher amount.
Saving takes patience. People must sacrifice instant financial rewards in favor of larger, delayed rewards. Yet savers don’t slowly weigh their options, balancing various arguments against one another, as other researchers have suggested, the new study indicates. They’re not necessarily better at resisting temptation, either. Instead, it’s simpler than that.
“Patient people are not doing more analytic work,” says study coauthor Scott Huettel, a psychology professor at Duke University. “They actually make these decisions the fastest. It’s the opposite of an effortful process.”
Personal savings rates in the US are at historic lows, so understanding what influences saving behavior is important. The authors says they hope their findings could help suggest better ways to improve financial literacy.
“Figuring out how people actually make decisions is helpful for pinpointing where the decision process can go awry,” says coauthor Dianna Amasino, a graduate student in neurobiology. “It could give people strategies they can use without having to increase time and effort.”
For the study, researchers recruited 217 young adults with a median age of 21 years. They observed participants in the lab as they chose between different monetary rewards, such as $5 today versus $10 in a month.
Using an eye tracker camera system, researchers captured subjects’ eye movements as they considered their choices. The eye tracking gave researchers a moment-by-moment snapshot of what participants considered important.
Eye tracking revealed that savers don’t meticulously analyze all the information available for each decision. Instead, they essentially screen out the noise by ignoring the element of time and focus solely on the factor that’s most important to them—the higher dollar amount. And in the most patient people, information about monetary amounts actually entered the decision process much earlier than information about time.
“We can see the savers’ decisions in their eye movements as their eyes jump back and forth between two dollar amounts,” Huettel says. “They don’t integrate information about time and money to determine how much a choice is worth, but instead use a simple rule that helps them make quick but good decisions.”
The results could help shape more effective interventions to promote savings, Huettel says. For instance, financial literacy efforts could place less emphasis on how to resist temptation, and instead emphasize the dollar amounts people will receive by saving.
“The way a decision is approached matters,” Amasino says. “Focusing on the long wait to accumulate savings can feel overwhelming. Focusing on the returns to savings and investments can be motivating.”
The new research appears in Nature Human Behaviour. The National Endowment for Financial Education and the National Science Foundation Graduate Research Fellowship supported the study. NIH provided computation support.
Source: Duke University
- Thomas Nelson
Brand: HarperCollins Christian Pub.
Studio: Thomas Nelson
Label: Thomas Nelson
Publisher: Thomas Nelson
Manufacturer: Thomas Nelson
New York Times bestseller! More than Five million copies sold!
You CAN take control of your money. Build up your money muscles with America’s favorite finance coach.
Okay, folks, do you want to turn those fat and flabby expenses into a well-toned budget? Do you want to transform your sad and skinny little bank account into a bulked-up cash machine? Then get with the program, people. There’s one sure way to whip your finances into shape, and that’s with The Total Money Makeover: Classic Edition.
By now, you’ve heard all the nutty get-rich-quick schemes, the fiscal diet fads that leave you with a lot of kooky ideas but not a penny in your pocket. Hey, if you’re tired of the lies and sick of the false promises, take a look at this—it’s the simplest, most straightforward game plan for completely making over your money habits. And it’s based on results, not pie-in-the-sky fantasies. With The Total Money Makeover: Classic Edition, you’ll be able to:
- Design a sure-fire plan for paying off all debt—meaning cars, houses, everything
- Recognize the 10 most dangerous money myths (these will kill you)
- Secure a big, fat nest egg for emergencies and retirement!
Includes new, expanded “Dave Rants” sidebars tackle marriage conflict, college debt, and more. All-new forms and back-of-the-book resources to make Total Money Makeover a reality.
Dive deeper into Dave's game plan with The Total Money Makeover Workbook: Classic Edition. The Total Money Makeover: Classic Edition is also available in Spanish, transformación total de su dinero.
Saving Money: The Top 100 Best Ways To Save Your Money And To Spend Your Money Wisely (Saving Money Ideas Secrets & Strategies for)
Studio: Pro Mastery Publishing
Label: Pro Mastery Publishing
Publisher: Pro Mastery Publishing
Manufacturer: Pro Mastery Publishing
Would you love to look at your savings account and see lots of money in there?
Whether you want to (1) wipe out your debt, (2) start making your money work for you, or (3) have powerful financial reserves, this book will teach you everything you need to know.
Money is a powerful tool.
In this book you will discover what you need to do to live a successful, happy, and fulfilling life free from the constant worry of how to meet bills, pay loans, and address other financial obligations! Discover an incredible variety of strategies, ideas, and lifestyle choices you can utilize to save money and wisely use what you have!
Discover how to become debt-free.
Use proven strategies to become financially free! Hundreds of thousands of other people have already successfully followed these time tested tactics with great success. They have regained control of their finances. Now you can do the same, following the step-by-step instructions provided in this book.
Beyond investing in yourself, there are many ways to grow your finances. You may feel overwhelmed by the sheer number of options, but that is where this book comes in. Within, you will find descriptions of multiple strategies for wealth-building, including the strengths and vulnerabilities of each. In the end, you will have all the information you need in order to make intelligent choices in investments and other money making options.
Whether you need just a few tips or want a full-fledged plan of action, this book can help you greatly increase your overall net worth. Learn practical planning tactics that can help you gain control of your finances and then manage them well into the future.
What Will You Discover About Saving Money?
- How to make the best investment of all time… in yourself.
- The best habits for increasing wealth.
- The different types of investing and how to start.
- Debt-reduction strategies.
- A world of ways you can save money on your monthly expenses.
You Will Also Learn:
- How to set financial goals that motivate you.
- Tips for investing your money.
- How to make your money work for you.
- Tactics that will keep you motivated and focused on your financial goals.
Life is so much better when you are worry free with lots of money in your savings account.
Take control of your financial future: Buy It Now!
How to Stop Living Paycheck to Paycheck (2nd Edition): A proven path to money mastery in only 15 minutes a week! (Simple Personal Finance Books) (Smart Money Blueprint)
Binding: Kindle Edition
Format: Kindle eBook
Studio: Impeccable Publishing
Label: Impeccable Publishing
Publisher: Impeccable Publishing
Manufacturer: Impeccable Publishing
In this timeless bestseller, you'll get the motivation and know-how for building up a big stash of emergency cash, getting out of debt, making sure you never run out of money, and avoiding the 11 worst budget traps (that'll ruin your financial plans if you let them!)
Find out the most important things that you can do to take control of your money and pay off debt. Get the budget how-to, tools, and knowledge you need to finally get ahead. You'll learn a complete budget system that works for beginners and takes only 15 minutes per week to maintain.
This is a straightforward budget planning method that will completely transform your finances, and eliminate your money worries once and for all.
You will also be given free lifetime access to the (digital) Money Tracker, a simple tool that makes budget planning quick and easy.
What's new in the second edition:
A brand new chapter has been added on the topic of money and happiness which is key to getting past money blocks that could be contributing to your paycheck-to-paycheck cycle, plus a few minor adjustments were made to the original manuscript.This is one of the budgeting books you NEED in your library. Buy NOW, learn how to make a budget that actually works, and transform your financial life forever!