The Key to Saving May Be in Your Head

EXCERPT: 

Your sense of power can impact how you save. A study called “Money in the Bank: Feeling Powerful Increases Saving” made different participants feel powerful or powerless by having them write down past events, imagine employee-boss scenarios, or sit in high or low positions.

In one case, university students were divided into three groups. One group wrote about feeling powerful, another about feeling powerless, and the last one didn’t write anything. They envisioned receiving 100 euros and had to decide how much of it to save. The powerful group saved a mean of 71.20 euros, the powerless group saved a mean of 48.73 euros and the last group saved 51.69 euros. Overall, the study showed that feeling powerful increases a person’s intent to save and the amount saved.

“I show that helping consumers regain control and restore their sense of power can motivate them to make better financial decisions,” says Emily Garbinsky, assistant professor of marketing at the University of Notre Dame and an author of the study.

Read the entire story on the NerdWallet website.