Study finds insecurity can prompt people to build up emergency funds
Those who are insecure about their lives may choose to save more as a way to bolster their emergency financial planning.
For an industry that deals in securities, it’s no surprise that fear of future situations is a driver of investment and savings behaviour; but a new study makes a link between self-image and a need to save.
“People who are insecure about their lives and the broader world save as a means of securing their future in anticipation of a possible emergency,” said Yael Steinhart, PhD, of Tel-Aviv University and lead author of the study.
The study, published in the Journal of Personality and Social Psychology, may give financial advisors useful insights into the motivation of some clients.
Across several experiments in Israel, the US, and the Netherlands, Steinhart and her co-author, Yuwei Jiang, PhD, of The Hong Kong Polytechnic University, found that people who experienced self-image threats had a greater intent to save money, perhaps because participants preferred to save money to reduce their worries and anxiety and to gain assurance about the future.
“Saving constitutes an important measure of economic well-being,” said Steinhart. “A person’s welfare should increase as they save more, because saving offers a sense of security about the future.”
Friends instead of money
The studies also revealed that those who had more social connections and felt better about those connections were less likely to save a $500 windfall.
“Friends may substitute for money as a psychological resource and buffer individuals from anxiety about the future,” said Steinhart.
People who feel insecure about their self-image may try to save more money, according to research recently published in the Journal of Personality and Social Psychology: https://t.co/aFR3836CpT pic.twitter.com/F1Zwu48WL6
— American Psychological Association (@APA) April 8, 2019
