For me, and I guess for many of you, it is difficult to know how exactly can one be motivated to save money. Do I save money for the long term (for future protection), for investments (to earn from interest rates), or for bigger savings to get a whole lot more investments and insurances?

At the moment, I choose the one remaining option, and therefore I guess so did most of us:

Do we save for the Christmas season?

This created for significantly reduced analysis paralysis and go on with my life, well, until next week’s bills.

Nonetheless, as September drew to a close. I felt compelled to write about savings and the changes we need to do begin a healthy saving habit.

This was indeed a challenge to me as I, try as I might, write a definite blog about how savings for today, tomorrow, and your future, without bothering to do any extensive research 🙂

Thus I call this blog post, crazy and counter-intuitive

…..well not so much.

Teaching people how to save is never easy. If it was, then no one would need financial education courses. But no one can deny that saving is necessary if you want to have better economic conditions for you.

Here’s the big question:

Why is it so difficult to save? Why is it difficult to make people transform from spenders to savers?

It’s our fault–the thousands and hundreds of financial advisers–really. We were so wrapped up in numbers and other economic models, resulting in paralytic analytics.

We were so contained in our own box, we forgot of these long lost factoids on what compels a person to save.

One – Financial Behavior is Cultural 

During those times we didn’t factor-in culture, we became gullible into believing that people were predictable. We figured that they were more prone to saving if we just gave them the resources to do so. Back then, economists thought so too.

In the 1930s for example, British economist John Maynard Keynes (the one person who arguably found a way around the Great Depression in the U.S.) thought that as people became wealthier and had more money, they would automatically increase their savings rather than their consumption.

He was wrong.

As the years went by, it became evident that money was not the motivating force behind savings. When people did become wealthier, most of them did not grow their piggy banks—what happened was that they took a more cavalier attitude toward savings and investments.

“Culture might have some influence in determining if a person is more prone to save or to spend”

For example, in countries like India, China, and Vietnam, saving money is the natural order of the day; whereas the United States and the U.K. give more emphasis on consumption and living on credit. Other factors are one’s family values, experiences, personality, and in some instances, religious beliefs.

In the Philippines, lotto may be equivalent to saving – Save P20 a day for a chance to win P100,000,000. A Savings Bank is a sufficient savings habit; while the rest of us belong to the “Unbanked” institutions–living on credit through pawnshops, private lenders, and Indians in motorcycles.

Two – Savings is about how you look at time. 

People have been accustomed to different views on money that there is no single way to convince them to start saving now.

The behavioral economist, Keith Chen, explained people who often talk about the future, actually finds it more difficult to save because it spooks them that saving is about postponing gratification to a different time. On the other hand,

“People who do not distinguish the future from the present are often better at savings because delaying gratification doesn’t bother them”

One standard response to the question of why people don’t save is that they can’t afford it right now. We often think that that savings are the leftovers after the bills have been made when it should be the other way around.

This oft-used alibi has largely been discredited by research. A study came out that investigated how some poor folks can save P100/day. Despite their poverty, most of the poor people interviewed by said study managed to find ways to save for the future, which means—economically—they can afford to save!

Three – Savings (and not saving) is a psychological game, not economics

When someone tells you they don’t save because they don’t have enough income; chances are, their excuses are just rationalizations than an explanation of their actual condition.

This doesn’t mean that we can totally discount economics on a person’s ability to save.

We often employ economics when we would weigh-in the cost and benefits—in this case, what is the cost and benefit of saving?

Psychology comes in because we have different subjective views on what cost is and how the benefits would be good for us.

So you got to be thinking really, what makes you spend and save? It isn’t just a bad habit you need to correct but recognizing one’s core personality when it comes to money.

Ultimately, it’s all up to you. What we believe is that people can change, especially if someone helps them to do so. Given the choice, most of us would opt to save for the future.

What can i-TeachOptions’ financial planners do for you

When you collaborate with us at –i-TeachOptions, we’ll figure out not only the how’s of saving, but the why’s — together.

We will talk about your inspirations before we could talk about your targets–and then talk about how you can save based on your personality.

 Let’s learn about the psychological and cultural aspects of saving. Together, let’s find out the aspects of your behavior that does all the tricks to makes you save or spend, become frugal, or impulsive.