Piggy Banks That Count Your Money
Saving is diﬃcult for many people. To teach children how to save money through easy small steps, parents give them piggybanks early in their lives.
Saving is diﬃcult for many people. To teach children how to save money through easy small steps, parents give them piggy banks to start to count their money. Adults too, utilize piggy banks to reach a particular savings goal more easily. However, ﬁlling up a piggy bank is a serial process which complicates saving for multiple targets in parallel. Saving in the present day can be a very uninspiring task for many people. As money becomes completely digital, people misconstrue its worth, lose ﬁnancial context and subsequently make poor spending decisions. Studies have proven that people don’t feel a strong sense of loss when they make purchases with digital money.
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Saving and mindful spending is a skill that not many are masters of. Behavioural economics says that the reason behind this are a few psychological challenges that people face, around saving for the future
Encouraging people to save for a meaningful goal means getting them to think about the opportunity cost. It means that the money spent today, won’t be available to spend on something else tomorrow, and vice versa: to save up for tomorrow, sacriﬁces need to be made today.
Saving is tough. It pitches the concrete against the abstract. Instead of buying that delicious pizza today – that one can see, touch and immediately eat – money is being saved for some future objective. It means delaying gratiﬁcation – something humans are usually pretty bad at.
People tend to feel more pain when the time between consumption and payment is short. Which is why paying for a meal on a credit or debit card, for example – which in eﬀect delays payment – somehow does not hurt as much as paying for it in cash, which is immediate. This encouragement for credit cards further makes it diﬃcult to judicially spend and hence poor savings for future goals.
These are a few reasons why people have problems with saving. The skill of saving has to be built with practice and appropriate tools or technology that is designed taking these psychological weaknesses into consideration.
Researchers have been trying to motivate behaviour change for the beneﬁt of the users. Behavioural economics strategies can be used in a good and eﬀective design of a technology that can inculcate the right saving habits in people over time.
Like a company allocating expenditure to diﬀerent budgets, as humans, we often allocate money to spend on certain things, like bills or food. In our heads, that money is already accounted for and cannot be accessed for daily purchases.
Concept of feeding the piggy bank with intentions or goals results in much better savings than feeding it with just money. Every time users look at the piggy bank, they are reminded of their intention to save. This physical representation of commitment proves to be a strong motivator toward saving.
An emotionally-driven reminder about the saving goals or rewarding messages on goal completion can help encourage people to save more.
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