According to research presented at the American Psychological Association, people are more likely to save money if their savings goals are in line with their dominant personality traits.
In the U.S. and around the world, savings rates are critically low. In October 2022, the Bureau of Economic Analysis reported Americans save just 2.3% of their income, the lowest in nearly two decades.
Although many individuals say they desire to save more money, saving is challenging in part because it requires them to get over the psychological barrier of giving up something now in order to get something later.
Researcher Sandra Matz, Ph.D., of Columbia University, and her colleagues Joe Gladstone, Ph.D., of the University of Colorado at Boulder, and Robert Farrokhnia, Ph.D., of Columbia University, wanted to see if aligning people’s savings goals to their personality traits might make it easier for them to save.
The research was published in the journal American Psychologist.
According to earlier research by Matz and Gladstone, those with high levels of agreeableness are less likely to save money than others, potentially as a result of having been told that appreciating people and valuing money are incompatible with one another and that “nice people” don’t appreciate money.
“We tried to think of ways we could motivate agreeable people to save more,” Matz said. “Could we simply highlight how saving money would help them protect their loved ones? This suddenly makes money a means to an end that they care about.”
It was important for us from the get-go to not only contribute to the existing literature and have a vigorous research study, but also to deploy the findings in the real world and come up with something companies could actually use and implement. Given the dire facts about savings in the U.S., we were particularly interested in helping to alleviate some of the challenges low-income and distressed households face in managing their finances.
Robert Farrokhnia
More broadly, she and her colleagues proposed that some goals might be more compatible with persons who possess particular personality qualities than others. For example, a conscientious person may be more inclined to make plans for the future and so be more motivated to save money for retirement.
Matz and her colleague tested the hypothesis in a survey and a field experiment. First, they analyzed data from 2,447 participants in the United Kingdom who answered questions about their Big Five personality traits (agreeableness, conscientiousness, neuroticism, openness and extraversion), as well as their savings goals.
The savings objectives were categorized by fit with personality attributes by independent raters. Saving for a future purchase, such as a car, saving for leisure and vacation expenses, saving for a “rainy day,” and preparing for retirement were among the objectives.
Overall, the researchers discovered that individuals with larger average nest eggs were those whose self-reported savings intentions closely matched their personality features. The effect held true across both poorer and wealthier participants.
It should come as no surprise that individuals with higher incomes saved more money on average, but personality-goal fit explained just 5% of the variation in savings amounts across all income levels.
The experiment was then carried out with 6,056 participants who were all enrolled in a program that offered savings incentives through SaverLife, a nonprofit savings app. The goal for the study’s participants, who had less than $100 in savings when they began the program, was to save at least $100 more in a single month.
After each participant completed a 30-item personality test, the researchers separated the participants into five groups. One group received five emails throughout the month urging participants to put money aside for a goal that complemented their most noticeable personality attribute.
A third group received randomly chosen goal messages, a fourth group received emails with a general message urging saving but no specific goal, and a fifth group received no emails at all. Another group received emails with goals that were inappropriate for their personality type.
The personality-matched condition had the best success rate, with 11.4% of individuals achieving the $100 savings target, although not all participants opened the emails, according to the research.
That compared with 7.42% in the standard message group, 7.46% in the random message group, and 7.85% in the personality-mismatched condition. Only 3.4% of those in the no-email control condition met the savings goal. Participants who were in the email groups but didn’t open their emails had about a 3% success rate.
Gladstone found that participants in the personality-tailored intervention were 3.57 times more likely than those in the control condition to reach their $100 savings goal.
“It was wonderful to see this approach worked,” said Farrokhnia.
“It was important for us from the get-go to not only contribute to the existing literature and have a vigorous research study, but also to deploy the findings in the real world and come up with something companies could actually use and implement. Given the dire facts about savings in the U.S., we were particularly interested in helping to alleviate some of the challenges low-income and distressed households face in managing their finances.”
“The recent economic downturn, including rising prices and higher challenges around achieving personal savings goals, made this pursuit even more important to us.”
