A new study has found that sending people cellphone reminders via text messaging has helped increase savings balances by 6 percent. The study was conducted at Dartmouth University and looked at the difference it made to be reminded that you need to save your money.
The Basics of the Study
The Dartmouth team traveled to three different countries, Philippines, Peru and Bolivia and teamed with local banks to send reminders to randomly-selected people who had opened a savings account. Periodically, the banks would remind the customers of the importance of savings, sometimes sending negative messages (i.e. if you don't make deposits, "your dreams will not come true").
However, the banks saw the greatest boost in deposits (16 percent) when they reminded customers of incentives they could receive for making deposits.
Could it Work in the U.S.?
The point of the study was to prove that self-control is not the main receive people don't save. Instead, they're just not paying attention. The researchers noted that this study could probably translate well in the United States where while many customers have automatic deposits set up, those who don't could be urged (with incentives possibly) to set up those programs. Ultimately, the point would be to remind customers of their ultimate goal, which is to save for the future.
Ways to Save in the Meantime
So you don't have text messages remind you save just yet, but that's no excuse for sitting on your butt and doing nothing. Here are a few ways to increase your savings:
- Set up a budget: Budgets help you to look at your income and expenses so that you can effectively set money aside for emergencies and more.
- Cut your expenses: After setting up your budget, you can determine what expenses are necessary so that those that aren't can be reduced to increase savings.
- Open savings accounts: By opening high-yield savings accounts, you can earn on the money you save.
Additionally, you can even set up reminders in your phone of the importance of saving. Who knows, it could work. However you get the point across, it's a good idea to remind yourself as much as possible about the importance of saving.