Live Stream: Want to save money? Environmental cues work better than will power

Wendy De La Rosa, co-founder of Common Cents lab where she focuses on using behavioural science to help make people take better financial decisions, takes less than five minutes to get under the skin of people who want to save.

“We all know that saving is important and is something that we should be doing. And yet, overall, we’re doing less and less of it,” she says.

Noting how people make attribute saving to willpower, Rosa claims that savings behaviour isn’t a question of how smart we are or how much willpower we have. The amount we save depends on the environmental cues around us.

“We ran a study in which, in one group, we showed people their income on a monthly basis. In another group, we showed people their income on a weekly basis. And what we found was that people who saw their income on a weekly basis were able to budget better throughout the month. Now, it’s important to know that we didn’t change how much money people were receiving, we just changed the environment in which they understood their income. And environmental cues like this have an impact,” she says.

Rosa also makes it clear that she is not going to ask her audience “how to open up a savings account or how to start saving for your retirement”. Her intention, she claims, is to bridge the gap between people’s intention to save and the action.