Menus Subscribe Search

Follow us

Your Money


(Photo: Vasiliy Koval/Shutterstock)

How Cyclical Thinking Might Help You Save Money

• January 07, 2014 • 12:00 PM

(Photo: Vasiliy Koval/Shutterstock)

The good news: researchers have found a way to make people save money. The bad news: it requires a complete rewiring of how human beings perceive their existence.

Whether it’s a lack of decent-paying jobs or an advertising-induced confusion between wants and needs or a propensity to spend without simultaneously practicing the refined art of saving, many Americans reside in financially precarious conditions. National household debt, for example, is on the rise, with consumers currently owing $11.3 trillion. Furthermore, nearly half of the country’s occupied homes are one monetary disaster away from poverty.

Then there’s the growing problem of student loans. According to the Los Angeles Times, outstanding student-loan balances increased $33 billion to $1.03 trillion in the third quarter of 2013, and a record 12 percent of loans were delinquent by 90 days or more.

And even though a Gallup poll conducted in early November found that the public planned to spend less this past holiday season than in 2012, Reuters reported in late December that total holiday spending rose 3.5 percent.

Cyclical thinking encourages people to start saving immediately, no matter the circumstances, whereas linear thinking allows for ongoing delays in putting something aside.

Perhaps some people, while contemplating things in their monetary abyss, tell themselves that their situation will get better tomorrow, or maybe the day after that. It’s 2014, after all, and with a new year comes yet another chance to balance the personal budget. No more Trenta lattes, they declare. No more purchasing of shirts that merely gather wrinkles in the dresser. No more buying of color bombs for Candy Crush. Fiscal responsibility, here we come!

New research, however, suggests a central reason people don’t bother storing cash stems from the prominent belief that the future will be different from the past, as opposed to just more of the same. In a recent article published online by the journal Psychological Science titled “Saving in Cycles: How to Get People to Save More Money,” co-authors Leona Tam from the University of Wollongong in Australia and Utpal Dholakia from Rice University argue that instead of thinking about time in linear terms, where a bank statement reporting robust numbers floats out there somewhere on the not-so-distant horizon, Americans who struggle with saving should start imagining that events recur without end. If that’s a tad bit confusing, just picture Bill Murray’s predicament in Groundhog Day.

Using three studies to test the outcomes of linear thinking versus cyclical thinking, Tam and Dholakia found that the participants who embraced the latter method produced an average of 74 percent higher savings estimates and saved an average of 78 percent more, too. That’s no small feat, considering the rather large problem.

Essentially, the researchers assert that cyclical thinking encourages people to start saving immediately, no matter the circumstances, whereas linear thinking allows for ongoing delays in putting something aside, however meager. Why start feeding the savings account now, the thinking goes, when there’s always later?

In sum:

While most people may not think about how much they will save during specific future periods, this study demonstrated the distinction between saving now and saving in the future and the fact that these two decisions are unique and affected by implementation planning and future optimism. Practically, people can make savings decisions at any time, and we surmise that deferral under the linear savings method may continue unabated as the person’s distant future becomes the near future and eventually the present.

The co-authors conclude by suggesting that their findings can be “easily implemented” by personal finance counselors, administrators, and teachers in order to start helping people save money and foster beneficial habits.

While cultivating cyclical thinking in a lab setting might be easy, permanently rearranging the average American’s understanding of how time works is a monumental endeavor. Our sense of life moving from past to present to future with multiple causes and effects occurring along the way is both rooted and reinforced in many of our philosophical, religious, and cultural traditions, not to mention our everyday experiences. But if saving money for anything from planned retirement to unexpected medical emergencies is downright impossible for many households across the nation, maybe a fundamental shift in comprehending how time works won’t be so hard in comparison.

Paul Hiebert
Paul Hiebert is the editor of Ballast, a Canadian-centric Website about culture and politics. Follow him on Twitter @hiebertpaul.

More From Paul Hiebert

A weekly roundup of the best of Pacific Standard and, delivered straight to your inbox.

Recent Posts

November 20 • 4:00 PM

Women, Kink, and Sex Addiction: It’s Not Like the Movies

The popular view is that if a woman is into BDSM she’s probably a sex addict, and vice versa. In fact, most kinky women are perfectly happy—and possibly healthier than their vanilla counterparts.

November 20 • 2:00 PM

A Majority of Middle-Class Black Children Will Be Poorer as Adults

The disturbing findings of a new study.

November 20 • 12:00 PM

Standing Up for My Group by Kicking Yours

Members of a minority ethnic group are less likely to express support for gay equality if they believe their own group suffers from discrimination.

November 20 • 10:00 AM

For Juvenile Records, It’s ‘Justice by Geography’

A new study finds an inconsistent patchwork of policies across states for how juvenile records are sealed and expunged.

November 20 • 8:00 AM

Surviving the Secret Childhood Trauma of a Parent’s Drug Addiction

As a young girl, Alana Levinson struggled with the shame of her father’s substance abuse. But when she looked more deeply into the research on children of drug-addicted parents, she realized society’s “conspiracy of silence” was keeping her—and possibly millions of others—from adequately dealing with the experience.

November 20 • 6:00 AM

Extreme Weather, Caused by Climate Change, Is Here. Can Nike Prepare You?

Following the approach we often see from companies marketing products before big storms, Nike focuses on climate change science in the promotion of its latest line of base-layer apparel. Is it a sign that more Americans are taking climate change seriously? Don’t get your hopes up.

November 20 • 5:00 AM

How Old Brains Learn New Tricks

A new study shows that the neural plasticity needed for learning doesn’t vanish as we age—it just moves.

November 20 • 4:00 AM

The FBI’s Dangerous Misrepresentation of Encryption Law

The FBI no more deserves a direct line to your data than it deserves to intercept your mail at the post office. But it doesn’t want you to know that.

November 20 • 2:00 AM

Brain Drain Is Economic Development

It may be hard to see unless you shift your focus from places to people, but both destination and source can benefit from “brain drain.”

November 19 • 9:00 PM

Gays Rights Are Great, but Ixnay on the PDAs

New research suggests both heterosexuals and gay men are uncomfortable with public same-sex kissing.

November 19 • 4:00 PM

The Red Cross’ Own Employees Doubt the Charity’s Ethics

Survey results obtained by ProPublica also show a crisis of trust in the charity’s senior leadership.

November 19 • 2:00 PM

Egg Freezing Isn’t the Feminist Issue You Think It Is

New benefits being offered by Apple and Facebook probably aren’t about discouraging women from becoming mothers at a “natural” age.

November 19 • 12:08 PM

Ethnic Diversity Deflates Market Bubbles

But it’s not in the rainbow and sing-along way you’d hope for. We just don’t trust outsiders’ judgments.

November 19 • 12:00 PM

As the Russian Hercules, Vladimir Putin Tames the Cretan Bull

We can better understand Russia’s president, including his foreign policy in Crimea, by looking at how he uses art, opera, and holiday pageantry to assert his connection to the Tsars.

November 19 • 10:00 AM

A Murder Remembered

In her new book, Alice + Freda Forever: A Murder in Memphis, Alexis Coe takes a humanistic look at a forgotten 1892 crime.

November 19 • 8:00 AM

The End to Race-Based Lockdowns in California Prisons

The legacy of “tough on crime” legislation has historically allowed correctional authorities to conceal and pursue politics that would be illegal anywhere else. Could that finally be changing?

November 19 • 6:00 AM

Like a Broken Record

From beer milers to long-distance crawlers, the unending appeal of being No. 1.

November 19 • 4:00 AM

High School Music Groups Grapple With Gender Gap

New research finds consistently higher numbers of girls compared to boys in high school bands, orchestras, and choirs.

November 18 • 4:00 PM

I Nearly Lost My Freedom Because I Couldn’t Pee in a Cup

After 21 years in federal prison for a first-time, non-violent drug offense, I’m now living in a halfway house. I can go out to work and visit my wife, but I’m sometimes reminded how vulnerable my new life is.

November 18 • 2:00 PM

Chesapeake Energy Faces Subpoena on Royalty Payment Practices

The Justice Department’s inquiry comes after an investigation and years of complaints from landowners who say they have been underpaid for leasing land to the energy giant for drilling.

November 18 • 12:02 PM

Is McDonald’s Really Becoming More Transparent?

In an increasingly ratings-based and knowledge-rich economy, the company could suffer if consumers don’t believe its new campaign is built on honesty.

Follow us

Standing Up for My Group by Kicking Yours

Members of a minority ethnic group are less likely to express support for gay equality if they believe their own group suffers from discrimination.

How Old Brains Learn New Tricks

A new study shows that the neural plasticity needed for learning doesn't vanish as we age—it just moves.

Ethnic Diversity Deflates Market Bubbles

But it's not in the rainbow and sing-along way you'd hope for. We just don't trust outsiders' judgments.

Online Brain Exercises Are Probably Useless

Even under the guidance of a specialist trainer, computer-based brain exercises have only modest benefits, a new analysis shows.

To Find Suspicious Travelers, Try Talking to Them

Brief, directed conversations are more effective at identifying liars than fancy behavioral analysis, experiment suggests.

The Big One

One company, Comcast, will control up to 40 percent of Internet service coverage in the U.S., and 19 of the top 20 cable markets, if a proposed merger with Time Warner Cable is approved by regulators. November/December 2014

Copyright © 2014 by Pacific Standard and The Miller-McCune Center for Research, Media, and Public Policy. All Rights Reserved.