NDSU Extension Service - Ramsey County


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Does How You Save Matter?

Does How You Save Matter?

             Two new Ohio State University studies provide valuable insight into what might -- and might not -- encourage Americans to build up their savings.

            In the study, researchers surveyed participants in the national America Saves campaign that encourages consumers to build their savings and reduce debt, no matter what their income level.

            Participants were split into two groups; one group was asked specific questions regarding when they planned to deposit money in their savings accounts in the next month; how much they planned to deposit; how they would make the deposit; and what income source the money would come from. The other group was asked just to provide comments about savings in general or their local America Saves program. In follow-up surveys, both groups were asked how much money they had saved during the month in question.

            "Most of the literature on how to achieve success in savings tells us that setting up a specific plan to achieve a goal is helpful," one of the researchers commented.  However, the researchers found that in this case, the group who was asked only for general comments actually saved more money than the group who was asked for a detailed plan.

            Researchers compared their findings with earlier research showing that people who set specific plans toward a goal might stop their positive behaviors once they achieve the goal, thereby limiting their potential success; or, they might realize early on that they are failing in taking the steps they originally outlined, become discouraged and drop the whole matter.  On the other hand, people who make general, rather vague pledges to "do better" or who take a more graded, step-by-step approach might tend to be encouraged by even small successes and repeat the behaviors that help them eventually achieve their goal.

            According to the results of the study, it would be better to encourage people simply to save 'more,' or save some money when they can, and not press ourselves into setting specific targets.  An even higher rate of savings success was found for people who enrolled in automatic savings plans or direct deposits into savings accounts.  Being part of an automatic savings plan took the matter out of the decision-making process as individuals didn’t have to continually determine when and how much money to put into savings.


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