How to Save More Money: It’s a Matter of Time

The Huffington Post:

Americans are living precarious lives. Nearly half of all families — many with homes and cars and jobs — are one misfortune away from financial disaster. A medical emergency or even a temporary loss of employment could gobble up their meager savings in six months or less. One in four Americans has zero savings.

Many of these people are approaching retirement age, but they will never be able to retire the way they once imagined. There are many reasons for this dire financial situation, but one important one is that Americans simply don’t put enough money aside. Even when they have a little extra in their paycheck, they spend it, rather than socking it away for the future. Why do they lack the foresight to secure their financial futures?

Two psychological scientists are offering a new idea about this — and a possible prescription for changing Americans’ financial behavior. Leona Tam of Old Dominion University and Utpal Dholakia of Rice University believe that people in general — but Americans in particular — think about time in a way that discourages saving for the future. Specifically, Americans tend to think of time as a line, from past to present to future, and the scientists believe this linear, future-oriented thinking leads to unwarranted optimism — and less prudence today. They want to encourage Americans instead to think of time as cyclical, and imprudence as a recurring pattern of behavior that is problematic — and require concrete and detailed solutions.

Read the whole story: The Huffington Post

Wray Herbert is an author and award-winning journalist who writes two popular blogs for APS, We’re Only Human and Full Frontal Psychology. Follow Wray on Twitter @wrayherbert.