By Dr. SirisakChueykamhang
Do you know the actual balance of your savings account right now? Or do you remember how much you spend each month for shopping or for traveling? Or do you even know how much you spend on coffee every month? Have you ever felt despair after checking your balance at the end of the month, or at the end of the year? Are you fed up with failed savings plans?
Money management is one of the biggest challenges we face in daily life. We never know how much money we should have, or even how much we do have. We don't know how much more we need to earn or even how much our peers are earning. Thinking a lot about money is a very common human condition, so then why do many people still face problems with saving money for the future, or fail to invest in long-term savings or retirement plans?Money management is one of the biggest challenges we face in daily life. We never know how much money we should have, or even how much we do have. We don't know how much more we need to earn or even how much our peers are earning. Thinking a lot about money is a very common human condition, so then why do many people still face problems with saving money for the future, or fail to invest in long-term savings or retirement plans?
We try to use various techniques for saving money, such as the spreadsheet, the piggy bank, the coin jar or even the credit card scissors. All these methods sound rational enough, but after looking deep into human behavior researchers have found that there is a hidden factor that causes these old-fashioned techniques to fail. Understanding what this is will help you avoid being fooled by ineffective savings techniques, in the future.
The results of extensive economic and psychological research show that the main obstacle to saving money is that we do not think about the future clearly enough. It sounds so basic, but it goes much deeper than that.
Further research by the World Bank and the Organisation for Economic Co-operation and Development (OECD), found that there are vastly different savings rates between citizens of different countries. The question is, is it possible that the influence of culture results in different money saving behavior in each country? The research of Keith Chen, behavioral economist and economics professor at UCLA, found that our language is one of the factors that determine behaviors relating to saving money for the future. Many people may wonder how language can affect human behavior. It can do this because every language uses its unique forms of grammar to help convey meaning. When we use a language in daily life, it subtlety influences us to think in ways similar to others who use the same language.
For example, if someone asks a Thai citizen for directions to Siam Square they would be told to go straight, then turn left or right at the next junction. On the other hand, anthropologists found an aboriginal tribe in a remote northern area of Queensland in Australia that would use a very different form of language (Guugu Yimithirr) to convey these directions. They would describe the directions to Siam Square based on the compass by using north, east, south or west. So, they will tell you to walk to the east then walk to the north or south at the junction. Their language uses grammar that makes them only think about directions according to compass points. Hence, no matter where they are, whether in a deep forest or climbing a mountain, during the day or at night, it is very difficult for these people to get lost because they have developed an excellent sense of direction from the very specific language they use in this regard.
Likewise, some languages have specific grammar forms concerned with timing, while others do not. A type of language that does not use a timing reference word is called a "futureless language". This type of language does not specify whether action is occurring in the present or future and people from countries where they speak this type of language tend to save more money than people from the other countries. For example, English speakers say, "It is raining now," or "It will rain tomorrow," while futureless language speakers such as Chinese, Japanese and German say, "Now it rain," and "Tomorrow it rain," with no auxiliary timing verb so that they use the same grammar for both the present and future sentences. So, you can say that the use of this less specific grammar causes people think less about the differences between present and future. While the people using languages with words for timing reference must think more about the future as something that is different than the present moment and more distant from them. In this way, they tend to spend money more in the present moment and have less to save for the future.
Statistics shows that British and American people who use these types of auxiliary verbs save money for the future at a lower rate than people in most other countries. In one economic behavioral study they showed a "present bias" or a tendency to give more importance to the present than the future.
Other researchers have studied people within the same country but who use a different local languages, and found that the people who used futureless language put about 31% more money into savings each year and had 39% more money saved for retirement than the people who used a language with specific future words . It is also interesting to note that people who speak futureless languages also tend to have less addictions to nicotine, practice safer sex and are less obese!
If you've read this far, then you may be wondering if learning a futureless language will help you save more money and have a better life. Should you study a futureless language or move to the futureless-language country? No, not necessarily. The most important thing to understand is that language alone does not make a big impact on behavior, but thinking about the future does influence behavior in regards to long-term savings and a healthy lifestyle. So how can you trick your brain and change your thinking about saving money and improve your future wellbeing? One way is to continue reading about money saving behaviors in our next Saving Economics column right here.