Behavioral scientist Wendy De La Rosa delves into the psychology behind savings behavior.
She shares practical insights that can help individuals improve their financial well-being by making intentional changes to their spending habits.
The impact of environmental cues
Environmental cues significantly influence our savings behavior.
Seeing income on a weekly basis instead of monthly, for instance, facilitates better budgeting throughout the month.
As human beings, we can be irrational when it comes to saving and spending and budgeting. But luckily, we know this about ourselves, and we can predict how we’ll act under certain environments. Let’s do that with saving. Let’s change our environment to help our future selves. – Wendy De La Rosa
Power of pre-commitment
The concept of pre-commitment can increase savings rates.
We often envision our future selves as perfect, capable savers.
Hence, making financial commitments for our future selves, like deciding on a savings percentage before filing taxes, can significantly improve savings.
