When it comes to saving the big bucks--the kind needed to pay your children's college tuition or retire with a decent lifestyle--it can be such a daunting task that you just give up and never do it.
Modern psychology has come to your rescue!
The No. 1 trick to saving a lot of money for the future is to visually focus on that future, creating vivid, detailed mental pictures that help make it more real and the money you'll need to fund it.
When it comes to our personal finances, impulsiveness and materialism can lead to bad decisions and a failure to save enough. And this affects a lot of us. The rate of personal savings has dropped to about 40 percent of what people saved in the 1980s.
The study: Led by Sarah Newcomb, PhD, a behavioral economist at Morningstar, the team conducted an online survey of more than 700 U.S. adults, about half of whom had a college degree or higher. The participants answered questions designed to measure their financial behaviors and assess their attitudes--such as, impulsiveness, materialism and financial literacy--about saving and spending.
- People who often make poor financial decisions (that is, spend more and save less) are also impulsive and materialistic.
- Those who make the best financial decisions (that is, spend less and save more) are those who are focused on the future and are less impulsive in spending.
The takeaway: Even more than understanding finances, the key to saving the big bucks is to keep a focus on the future when making financial decisions today.
--From the Editors at Netscape