You’re More Likely To Save Money When Your Savings Goals Match Your Dominant Personality Traits, According To New Research
Individuals are more likely to save money when savings goals align with their dominant personality traits, according to a new study published by the American Psychological Association (APA).
This finding is critical since savings rates are severely low both in the United States and abroad. In fact, the Bureau of Economic Analysis reported in October 2022 that Americans are saving only 2.3% of their earnings– which is the lowest savings rate in almost two decades.
And while most people would like to save more money, the practice is extremely challenging– especially because putting away funds requires people to forego instant gratification in the present to invest in their futures.
That’s why the research team, hailing from Columbia University and the University of Colorado at Boulder, set out to study whether or not aligning an individual’s savings goals with their personality traits could make saving money easier.
Past research has found that when people are highly agreeable, they are less likely to save money. This relationship may tie back to different value judgments– with highly agreeable people thinking that valuing money conflicts with valuing people.
“We tried to think of ways we could motivate agreeable people to save more,” said Sandra Matz, the study’s lead researcher.
“Could we simply highlight how saving money would help them protect their loved ones? This suddenly makes money a means to an end that they care about.”
And overall, the team wondered whether certain savings goals might make more sense for people with specific personality traits. So, they tested this hypothesis using both a survey and a field experiment.
To begin, the team collected data from 2,447 United Kingdom-based participants who were asked to answer questions about the Big Five personality traits– which include conscientiousness, agreeableness, neuroticism, extraversion, and openness. Additionally, the participants were asked about their money-saving goals.
Krakenimages.com – stock.adobe.com – illustrative purposes only, not the actual person
Some of these goals included long-term savings for future purchases– such as a new car– as well as saving for retirement, a “rainy day” fund, and vacations.
Afterward, independent raters were able to code the different savings goal responses into categories that matched personality traits.
Through this survey, the researchers found that, on average, the participants whose savings goals best matched their personality traits actually had more stashed away in the bank. And interestingly, this finding was consistent among both wealthier and poorer individuals.
It is important to note that, on average, the individuals who earned more money also had more cash in the bank. Nonetheless, when accounting for savings goals and personality fit, there was only a variance rate of about 5% across all income levels.
Following the survey, the researchers then conducted a field experiment that included 6,056 individuals who participated in a savings incentive program offered by Saver Life– a nonprofit savings app.
When the participants first joined this program, they all had under $100 in their savings accounts. Then, each individual was tasked with saving at least $100 more within one month.
For the study, each participant also completed a personality assessment– allowing the team to divide the participant pool into five groups.
The first group received five emails throughout the month, which encouraged them to put money away for a goal that worked well with their most significant personality trait.
On the other hand, the second group was sent emails encouraging them to save toward a goal that did not align with their dominant personality trait.
The third group then received emails that contained randomly-selected goal messages; meanwhile, the fourth group’s emails only contained generic messages that encouraged general savings. Finally, members of the fifth group did not receive any emails.
Now, not every individual opened the emails. However, among those who did, the team found that the highest saving success rate was achieved when participants received saving goals emails that matched their personality. This resulted in 11.4% of the participants reaching their savings goal of $100.
Conversely, only 7.42% of participants in the standard message group, 7.85% of the participants in the personality-mismatched group, and 7.46% of the random message group reached their savings goals.
Plus, just 3.4% of participants who received no emails successfully completed their savings goal.
This ultimately meant that people who received interventions tailored to their personality were 3.57 times more likely to reach their savings target as compared to individuals in the control group.
“It was wonderful to see this approach work,” concluded researcher Robert Farrokhnia.
“It was important for us from the get-go to not only contribute to the existing literature and have a vigorous research study, but also to deploy the findings in the real world and come up with something companies could actually use and implement,” he continued.
“Given the dire facts about savings in the U.S., we were particularly interested in helping to alleviate some of the challenges low-income and distressed households face in managing their finances. The recent economic downturn, including rising prices and higher challenges around achieving personal savings, made this pursuit even more important to us.”
To read the study’s complete findings, visit the link here.
If true crime defines your free time, this is for you: join Chip Chick’s True Crime Tribe
Instead Of Tossing Your Coffee Grounds, You Can Actually Use Them To Help Your Garden
After A Really Tough Week, She Got Into A Fight With A Woman Over A Donut At A Coffee Shop
Sign up for Chip Chick’s newsletter and get stories like this delivered to your inbox.
More About:Science