Thinking in Circles for a Better Future

It didn't take long to discover that many American adults have either severely underfunded or have no retirement savings at all. Interestingly, the same Federal Reserve's 2014 survey that found nearly one third of working adults have no retirement savings or pension, also reported that Americans are increasingly optimistic and feel positively about their financial situation. While I suppose ignorance is bliss, I was inspired to do some further research to see if there might be a way to apply psychology to this problem to get more people to save for their future.

One interesting solution I came across is from a series of studies conducted by Leona Tam at the University of Wollongong in conjunction with Utpal Dholakia at Rice University, outlined in their paper titled " Saving in cycles: how to get people to save more money. " The typical western cultural perspective uses a linear view of time, telling us to focus on the future and to set goals to save money. By contrast, Tam and Dhloakia tested a methodology using a cyclical model of time – viewing life events as a series of recurring events – that framed saving money in cyclical terms, emphasizing the present.

They found that the individuals using the linear savings method predicted that they would save a lot of money in the future, but did not; rather, they perpetually deferred the task of saving further into the future. Their optimism got in the way of their success.

By contrast, individuals using the cyclical savings method were encouraged to save money right away and create a routinized saving behavior and mindset. They were less optimistic in their predictions about their ability to save than those using the linear model, but in fact, individuals who used the cyclical savings method saved an average of 78% more money compared to those using a linear savings method.

What a simple thing – a shift in how one thinks about time, focusing on today rather than tomorrow – caused individuals to be significantly more successful at their goal of saving money.

As many people are making resolutions to make positive changes in their lives this time of year, consider that this cyclical time perspective could apply beyond saving money to many popular goals people have: losing weight, eating healthier, quitting smoking, reading more, volunteering, etc. Tam and Dhlolakia would advise you to just start today. And then keep the cycle going. It's that simple.

Brands can help their customers start a positive cycle by thinking about their customer journey as a cyclical path that repeats over time.

If you're interested in how Traction can help plan your customer journey, cyclical or otherwise, feel free to reach out.