Saving is the key to a brighter, financially secure future -- this is something we all know about. And yet, there seems to be a lot of people who find it hard to set aside money from their monthly income. The hard truth is, it is not a walk in the park. Some may have been diligent in making that dream a realization but there are certainly those who can't walk the talk.
Study
The goal is to save but it is easier said than done
But did you know that there's an easier way of following through that vision? A study conducted by the Columbia Business School's Chazen Institute analyzed low-income clients of microcredit banks in Chile.
These are regular borrowers and run small businesses. However, it was found that the automation of savings wasn't effective for them because they were self-employed. Researchers then laid out two strategies that could help them and us.
Support System
It pays to know you are surrounded by like-minded people. Working out at the gym would seem more enjoyable if you were with a pal and adhering to a diet may become more bearable if you do it with a friend. So, it only pays to have another person who shares the same interests as you.
Find a group of people who are in the same situation as you
In the study, the participants were divided into two groups: the first one was provided with an offer wherein their savings account would have an interest rate of 0.3 percent to 0.5 percent, while the other team was given non-financial rewards, monitoring, and public goal setting. The first set of people only showed little change while the second saw their savings increase by 3.7 times.
The support group helped a team save more by reminding them of their goals. Columbia Business School James P. Morgan professor Stephan Meier said that you can do this by forming a group that is composed of people who are in the same financial situation as yours. This means not including a rich member that may cause discouragement among others.
Reminders
Being forgetful may sometimes be the reason you can’t save. That or you just need to be reminded of your goals every time just to be on track.
The researchers also tried checking if a text message would be helpful for the participants to meet their goals – some of the strategies include receiving a text reminder of their goals or getting a text from family and friends asking for updates on their savings. Stephan said that the results showed that a mere text proved essential in sticking to the plan.
Those who receive a reminder tend to save
When the text messages stopped, the participants’ savings decreased. What all these prove is that a reminder is important toward achieving your savings goal, much like how an alarm is helpful in waking you up and reminding you that you have work.
The professor also advised having a suitable number of reminders, however, it won’t work if you get hundreds of reminders a day. The key is to prioritize and choose which one is the most important to you.