The saving mentality
By Teamspirit on Thursday, 13 July 2017
This week an Australian bank has released research indicating that the human brain can be re-wired to alter its attitude to financial savings.
The study from UBank, led by the understanding that Australia is a nation of spenders, sought to discover the mindset behind the population’s money habits. Participants were asked to respond to a set of financial decision-making tasks while having their brain activity tracked using electrode sensors.
To begin with, individuals were asked what they might do with a lump sum of money if it was handed over to them today. Then having been presented with an edited photograph of their ‘future self’, suggesting what they might look like in 10 to 20 years time, the exercise was repeated.
After being forced to connect more intimately with their future self, immediately participants’ decisions became more future orientated - with 72% shifting their mindset towards saving over spending.
Humans have a natural present bias, or tendency to prioritise short-term gains, as is acknowledged in behavioural science thinking. However while our natural default is to seek immediate reward, the UBank research demonstrates that when we are conscious of our future situation we will be more likely to defer and save.
In light of their results UBank have released a new banking app to help customers save, along with a selection of tips for everyday life. These include physically visualising your saving goals, making saving a regular habit by putting a couple of pounds away each day, carrying physical cash rather than spending on card and disclosing spending to loved ones. And of course, getting to know your future self – for which they recommend downloading the Face App.