If you follow me on social media, you may have seen that I have been talking a lot about a study that is coming out, sponsored by Capital One, exploring the connection between the emotions associated with saving nostalgic items and the feelings associated with saving money in the future.
I really identified with this concept; I can feel extremely nostalgic about things I have collected and saved over the years…one thing I save that comes to mind are special pieces of china that my mom left me when she passed. Of course, initially, I knee-jerked saved everything, but eventually, what I realized was that I was accumulating things that I associated with specific memories – FUN memories. These items represented the bigger picture – I was preserving my mother’s sense of fun and the vision of family that I connect to when she was alive. Having these things, her cute little tea set and being able to see these things in my daily life remind me of what is important.
And that is the whole point of saving, right? To connect yourself to a higher vision or value. I think this is true of saving with money as well – you really need to know the WHY behind the saving to fully commit.
I am seeing a lot of parallels between the Capital One study and these ideas. We already know, and previous research confirms that memories can be so vivid it’s like experiencing the event again. One of the areas of the brain that is involved in memory processing – the amygdala – also plays a role in emotional reactions and decision making. So how can we tie this all together for better financial decision-making?
The Study
As part of Capital One’s overall effort to redesign the banking experience and help people feel confident in their relationship with money, Capital One partnered with Financial Psychologist Dr. Brad Klontz of Creighton University to test whether positive memories tied to sentimental items, thus powerful and vivid memories, could be harnessed to improve financial decision-making – or, more specifically, savings behavior. The Banking Reimagined Savings Study, sponsored by Capital One and led by Dr. Klontz, randomly assigned participants to one of two groups – the control group or the sentimental item group – and compared the results of the two groups. The control group received a standard financial education presentation (FE) without any emotional engagement. The sentimental item group (SI) experienced an immersive positive emotion-based presentation and exercises revolving around the sentimental item they were asked to bring with them to the study.
What They Found
The sentimental item group increased their savings three times (67%) more than the control group (only 22%) as reported in the follow-up phase.
If maintained over the course of the year, this change could represent $10,020 in annual savings on average, compared to $5,838 in annual savings on average prior to the study.
Across all five cities, the sentimental item group reported saving, on average, a substantially higher percentage of their gross income three weeks after the emotion-based immersion::
- Boston: 75% increase
- Austin: 40% increase
- Seattle: 47% increase
- Atlanta: 137% increase
- Dallas: 115% increase
The sentimental item group showed statistically significant increases in their financial savings behaviors from pre-experiment to post-experiment: readiness to save, confidence toward saving and financial health.
Readiness to Save: the sentimental item group’s readiness to save increased three times more compared to the control group
Confidence in Ability to Save More: The sentimental group’s confidence in their ability to save increased twice as much as the control group
Financial Health: the sentimental group’s reported financial health increased four times more than the control group
The sentimental item group reported that they were more significantly emotionally attached (10%) to their sentimental item from pre-experiment to post-experiment, an effect needed to change behavior from post-experiment to the follow-up phase.
What This Means
#1 The researchers hypothesize that the sentimental items group were able, through positive, emotionally-charged memories, to develop a deeper emotional incentive for saving money.
The exercises they engaged in may have enabled them to more viscerally relate saving money to the family, life values and goals that mean the most to them.
#2 By incorporating sentiment and savings experiences into financial planning, it may be possible to successfully harness a person’s emotions in order to facilitate better and healthier financial decision-making.
What You Can Do
Based on the Banking Reimagined Savings Study results, people might be able to try some of the same exercises the sentimental item group experienced in the study to improve their own savings behavior.
Tapping into emotions connected to saving heartfelt nostalgic items may actually make you more inclined to save financially.
Think of an item you’ve kept for positive sentimental reasons and ask yourself what kind of feelings and values are associated with that item. Is it something a grandparent or parent gave you and thus is tied to the importance of a loving and supportive family? Or is it something from a vacation abroad that serves as a reminder of a sense of adventure and the great experiences you were lucky to have and that you hope to have more of in the future? Use the power of emotion tied to your sentimental item and the identified feelings and values associated to determine how to live your values today and improve your financial savings behavior.
When you are motivated to take action, automate it!
For example, set up a monthly contribution from your checking account to a savings account, like Capital One’s 360 Money Market, a high-interest rate account. It elevates banking as a flexible, fee-free online, mobile and in-person support savings account that offers a rewarding high-interest rate and access to tools needed for long-haul savings growth.
Explore the innovative tools and educational services available to solve money problems and meet your financial goals.
Capital One will be opening two new Capital One Cafés in Seattle to offer the entire community of Seattle and Bellevue (not just Capital One customers) with access to free educational content, services and innovative tools to help improve your relationship with money! For example, Capital One’s Money Coaching program offered in Cafés in San Francisco, Boston, Chicago, LA, Denver and other cities, is designed to connect your values to your money, get your money under control, plan a path for your future financial goals, and the confidence to make it happen. It’s like life coaching, but for your finances – and it’s free!
Celebrate with Capital One for a chance to win $10,000!
To honor National Savings Day today, October 12, and to encourage people to “get sentimental” to improve their own savings, Capital One launched #ShareMySave – a celebratory contest that calls on Boston, Austin, Seattle, Dallas and Atlanta residents to share images of their most treasured keepsake and tell why that item is so special and meaningful to them on Twitter and Instagram using #ShareMySave and #Contest for a chance to win monetary prizes up to $10,000!
No purchase necessary.
Thank you Capital One for sponsoring this post! This is a paid endorsement. All opinions are my own and were not directed by Capital One. To learn more about Capital One, visit www.capitalone.com.