Feeling insecure? Great, you’re more likely to save
A new study finds that when people feel unsure about themselves, they tend to fill their piggy banks
There’s an upside to feeling insecure about yourself: your bank balance is likely to swell.
An international study published in the Journal of Personality and Social Psychology found that when people feel insecure about their lives and the broader world, they tend to save as a means to secure their future in anticipation of a possible emergency.
More than 3,500 people took part in the study, which examined the relationship between self-image threats (things that challenge the positive perceptions people have about themselves) and the tendency to save money.
In all cases, the researchers found that people who experienced self-image threats had a greater intentive to save money. This may be because participants preferred to save money to reduce their worries and anxiety and to gain assurance about the future, the researchers said.
“Saving constitutes an important measure of economic well-being. A person’s welfare should increase as they save more, because saving offers a sense of security about the future,” said researcher Yael Steinhart.
When it comes to saving, South Africans are not among the best in the world.
MyTreasury.co.za found that in 2018 many South Africans were living in debt or eating into their capital. “While 16 million South Africans do have savings accounts, they are emptier than they should be,” the company said.
According to Old Mutual, we should aim to save at least 10% of our pre-tax earnings.
In one experiment in the international study, participants played a Sudoku computer game. They were then randomly told that their score put them in the top, middle or bottom third of all the players.
They were also asked to rate their saving tendencies by completing a questionnaire and reporting the amount they would save if they received $1,250.
People who were told their scores were in the bottom third, and thus experienced a high self-image threat, reported more savings than those who were told they scored in the middle or upper third.
Another experiment looked at the influence of social connections. Participants described an event in which they felt bad or good about themselves and indicated the number of friends they met and talked to on the phone in an average week.
The researchers also asked them to quantify the number of their friends based on whether they had a few or many.
Participants then imagined they received $500 and indicated how much of that they would deposit in a savings account. Those who had more social connections, and felt better about those connections, tended to save less money.
“Friends may substitute for money as a psychological resource and buffer individuals from anxiety about the future,” said Steinhart.
Handy saving tips from Old Mutual:
Make savings a priority in your everyday life.
Find a way to make savings fun.
The time to start saving is now. The sooner you start, the better.
Separate your wants from your needs – and be stern about it.
Keep track of your spending habits so you can see where you might be wasting money.
Start putting money into your retirement plan or account as soon as you receive your first salary.