How Nostalgia Can Help You Save Money
Our emotions play a large role in our money habits and behavior . And, as a recent study by financial psychologist Dr. Brad Klontz shows, our memories do too.
In a recent study (commissioned by Capital One), Dr. Klontz and colleagues at Creighton University examined the relationship between happy memories, mementos, and financial decisions. They divided the subjects into two groups: control and experimental. They instructed the experimental group to bring a “nostalgic item or depiction of a nostalgic item” into the study.
During the study, a control group watched a presentation on the importance of savings and the various methods for doing this. The experimental group did not see this presentation. In Psychology Today, Dr. Klontz explains how the experiment worked for this group:
“Instead, they experienced a presentation that focused on emotion-based immersive exercises designed to awaken positive memories and feelings associated with their nostalgic subjects. When these positive emotions were triggered, the presentation moved on to naming those emotions and core values associated with their nostalgic subjects and how those values and emotions relate to future savings goals. ”
In other words, the researchers evoked positive emotions in the experimental group about saving, while the control group just received some standard advice on financial literacy. Over the next several weeks, the researchers examined the savings habits of both groups. Results?
“While the control group increased their savings by 22 percent, the experimental group increased their savings by a whopping 67 percent — a threefold increase.”
It just goes to show that personal finance is more emotional than mathematical finance. You can learn the basics of Money 101 all day long, but in the end it all comes down to squeamish things. As Klontz concludes, “We need to use our emotional brain if we want to change our financial behavior.”
Based on his research, he suggests several exercises to help you improve your money habits. For instance:
Think of an item that you have kept for positive sentimental reasons. Hold it in your hands. Think about the circumstances under which the item became your owner and what it means to you. Is it something that your grandparents or parents gave you and is thus related to the importance of a loving and supportive family? Is this an object from your childhood that you associate with a sense of security and safety? Or is it something from a vacation abroad that serves as a reminder of the sense of adventure and wonderful experiences you are lucky enough to have and hope to have in the future?
From there, explore the values and feelings you have associated with this keepsake. As Klontz points out, your answers are likely to help identify the priorities that matter most to you. You can then use your savings goals to support those priorities. It also suggests visualizing your goal by actually giving your savings account a name – this is the advice we offered earlier .
Additional tips and research details can be found in Klontz’s full article here .