Think How Much Money You Will Save to Pay Off Debt
There is no shortage of tips on how to save money and pay off debt: think about how your savings will benefit your future, make it automatic, use an app to optimize the process, etc. But new research called “Amount and Time” provides independent impact on intertemporal choice “, published in the journal« Nature Human the Behavior “, – points out that the easiest way to save – this is just to focus on how much money you will have at hand, not on the amount of time it would take to save their.
Researchers at Duke University examined the eye movements of study participants who received two different monetary rewards: a smaller amount available now and a larger amount available later (for example, they could choose between $ 5 today or $ 10 a month). They found that participants who selected the highest amount did so quickly, rarely taking into account the amount of time when choosing an award.
Rescuers “are essentially shielding noise by ignoring the element of time and focusing solely on what matters most to them — the higher dollar amount,” the study said in a press release . “And for the most patient people, the information about the sums of money was actually included in the decision-making process much earlier than the information about the time.”
The study notes :
People with high patience displayed amazing – and potentially counterintuitive – behaviors. Instead of demonstrating a slow and analytical comparison process that brings together all the available information, they tended to use the heuristic strategy of directly comparing sums and choosing the larger. In contrast, people with low levels of patience exhibited a more balanced learning process for quantity and time, as seen in gaze tracking and model parameters. This combination of results — with “good” decisions arising from heuristics and “bad” decisions arising from a more analytical comparison process — seems to run counter to rational choice models. However, it echoes previous findings in other areas of choice that point to the use of heuristics as a characteristic feature of effective decision making.
The researchers say it can be used to improve saving practices. Rather than focusing on “how to resist temptation,” as many financial experts recommend, it would be more helpful to focus on “the dollar amounts people will get from saving.”
“It’s how the decision is made that matters,” study co-author Dianna Amasino, a PhD student in Duke’s Department of Neuroscience, said in a press release . “Focusing on the long wait to accumulate savings can seem overwhelming. Focusing on the return on savings and investment can be a motivating factor. “
When you focus on your income, you can be more patient and end up saving more. CreditCards.com notes that this is not the first study to show that “close attention to the prize” can be helpful in getting out of confusing or difficult situations.
“A 2014 study published in Motivation and Emotion, for example, found that people are more likely to meet exercise goals when they focus on the goal itself, rather than at work it would take to get there,” they note.
So, if you have a savings goal, focus on how much you can save each month and what it will do over time. Write the number on a piece of paper and stick it to the refrigerator or keep it in pencil in your day planner every week. “If you have a lot of credit card debt, you can use an online calculator to work out exactly how much money you would have left for other purchases if you paid your card more aggressively,” suggests CreditCards.com. This can help you save more if you focus on results.