Try to visualize a detailed picture of your later life, money expert suggests
THURSDAY, Aug. 4, 2016 (HealthDay News) -- Focusing on the future can help people save money, a new study says.
The research included more than 700 American adults who took an online survey about their financial behaviors and attitudes associated with saving or spending. About half had a college degree.
"We wanted to better understand the psychological factors that drive consumer spending and saving with the hope of identifying and targeting those that could potentially motivate more saving and investment among people who have adequate resources but poor financial management skills," said researcher Sarah Newcomb. She is a behavioral economist at Morningstar, a financial services firm.
Regardless of the participants' financial literacy, a focus on the future was associated with less spending and more saving, while impulsiveness and materialism were linked with more spending and less saving, the study found.
"Our results suggest that by helping people to create vivid, detailed mental pictures of their future, we may be able to help people make better financial decisions," Newcomb said in an American Psychological Association (APA) news release.
The researchers noted that life expectancy is increasing in the United States. At the same time, fewer employers offer pensions, so there's a greater need for people to save for their retirement themselves. Yet, savings rates have fallen to only about 40 percent of what they were in the 1980s, Newcomb said.
"The U.S. government has invested hundreds of millions of dollars into financial literacy programs, but these findings suggest that financial literacy alone may not be the answer," she said.
"Working with individuals to develop a clearer picture of their future may have a more substantial impact than simply teaching financial concepts," Newcomb added.
The study was scheduled to be presented Thursday at the APA's annual meeting, in Denver. Findings presented at meetings are generally viewed as preliminary until they've been published in a peer-reviewed journal.
The National Council on Aging has more about economic security.