Finally, a piece of financial advice that does not involve the phrases "cutting back", "giving up", or "substitute all fun activities." New research from University of Toronto's Rotman School of Management found that the key to saving up money is to focus on one specific goal.
You would think (as do many financial advisers) that squirreling away cash for two things would be better than one, but according to one of the co-authors, that's not the case. "If you have only one goal, it puts you in a more action-oriented mindset and helps you save more," Min Zhao, assistant professor of marketing at the University of Toronto, told ScienceDaily.com. "Too much thinking about which goal is more important keeps people from acting."
Related: Top 7 money saving motivations
And the more hard up you are for money and the harder it is to save, the better this technique works, say the researchers.
This could really change the way money experts advise clients. As ScienceDaily.com points out, "The findings suggest that financial or savings advisors may want to take a different tack. Banks sometimes advertise a list of reasons to save, but such a message could 'backfire' says the study, because that introduces multiple goals, leading to eventual failure in clients' savings plans."
So what do you do if you're like most people and are saving up for multiple things? Zhao recommends finding a way to narrow it down to the most important and lumping those together into one general goal. For example, let's say you're hoping to buy a new oven, and you'd like to spring for a new blender too. Instead of trying to save for each individually, make your goal something like "Kitchen Essentials" and you'll be more successful. It may sound too easy to really work, but the experts insist that focusing on just one goal as opposed to several is what does the trick. Why not try it and see?
source: Yahoo.com
You would think (as do many financial advisers) that squirreling away cash for two things would be better than one, but according to one of the co-authors, that's not the case. "If you have only one goal, it puts you in a more action-oriented mindset and helps you save more," Min Zhao, assistant professor of marketing at the University of Toronto, told ScienceDaily.com. "Too much thinking about which goal is more important keeps people from acting."
Related: Top 7 money saving motivations
And the more hard up you are for money and the harder it is to save, the better this technique works, say the researchers.
This could really change the way money experts advise clients. As ScienceDaily.com points out, "The findings suggest that financial or savings advisors may want to take a different tack. Banks sometimes advertise a list of reasons to save, but such a message could 'backfire' says the study, because that introduces multiple goals, leading to eventual failure in clients' savings plans."
So what do you do if you're like most people and are saving up for multiple things? Zhao recommends finding a way to narrow it down to the most important and lumping those together into one general goal. For example, let's say you're hoping to buy a new oven, and you'd like to spring for a new blender too. Instead of trying to save for each individually, make your goal something like "Kitchen Essentials" and you'll be more successful. It may sound too easy to really work, but the experts insist that focusing on just one goal as opposed to several is what does the trick. Why not try it and see?
source: Yahoo.com