Menus Subscribe Search

Follow us


Your Money

money-roll

(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 PSmag.com, delivered straight to your inbox.

Recent Posts

October 21 • 4:00 AM

She’s Cheating on Him, You Can Tell Just by Watching Them

New research suggests telltale signs of infidelity emerge even in a three- to five-minute video.


October 21 • 2:00 AM

Cheating Demographic Doom: Pittsburgh Exceptionalism and Japan’s Surprising Economic Resilience

Don’t judge a metro or a nation-state by its population numbers.


October 20 • 4:00 PM

The Bird Hat Craze That Sparked a Preservation Movement

How a fashion statement at the turn of the 19th century led to the creation of the first Audubon societies.


October 20 • 2:00 PM

The Risk of Getting Killed by the Police If You Are White, and If You Are Black

An analysis of killings by police shows outsize risk for young black males.


October 20 • 12:00 PM

Love and Hate in Israel and Palestine

Psychologists find that parties to a conflict think they’re motivated by love while their enemies are motivated by hate.


October 20 • 11:00 AM

My Dog Comes First: The Importance of Pets to Homeless Youth

Dogs and cats have both advantages and disadvantages for street-involved youth.


October 20 • 10:00 AM

Homophobia Is Not a Thing of the Past

Despite growing support for LGBT rights and recent decisions from the Supreme Court regarding the legality of same-sex marriage, the battle for acceptance has not yet been decided.


October 20 • 8:00 AM

Big Boobs Matter Most

Medical mnemonics are often scandalous and sexist, but they help the student to both remember important facts and cope with challenging new experiences.


October 20 • 6:00 AM

When Disease Becomes Political: The Likely Electoral Fallout From Ebola

Will voters blame President Obama—and punish Democrats in the upcoming mid-term elections—for a climate of fear?


October 20 • 4:00 AM

Coming Soon: The Anatomy of Ignorance


October 17 • 4:00 PM

What All Military Families Need to Know About High-Cost Lenders

Lessons from over a year on the beat.


October 17 • 2:00 PM

The Majority of Languages Do Not Have Gendered Pronouns

A world without “he.” Or “she.”


October 17 • 11:01 AM

How to Water a Farm in Sandy Ground

Physicists investigate how to grow food more efficiently in fine-grained soil.


October 17 • 10:00 AM

Can Science Fiction Spur Science Innovation?

Without proper funding, the answer might not even matter.


October 17 • 8:00 AM

Seattle, the Incredible Shrinking City

Seattle is leading the way in the micro-housing movement as an affordable alternative to high-cost city living.


October 17 • 6:00 AM

‘Voodoo Death’ and How the Mind Harms the Body

Can an intense belief that you’re about to die actually kill you? Researchers are learning more about “voodoo death” and how it isn’t limited to superstitious, foreign cultures.


October 17 • 4:00 AM

That Arts Degree Is Paying Off

A survey of people who have earned degrees in the arts find they are doing relatively well, although their education didn’t provide much guidance on managing a career.


October 16 • 4:00 PM

How (Some) Economists Are Like Doomsday Cult Members

Cognitive dissonance and clinging to paradigms even in the face of accumulated anomalous facts.


October 16 • 2:00 PM

The Latest—and Most Mysterious—Player in the Nasty Battle Over Net Neutrality

As the FCC considers how to regulate Internet providers, the telecom industry’s stealth campaign for hearts and minds encompasses everything from art installations to LOLcats.


October 16 • 12:00 PM

How Many Ads Is Too Many Ads?

The conundrum of online video advertising.


October 16 • 11:00 AM

Unlocking Consciousness

A study of vegetative patients closes in on the nature of consciousness.


October 16 • 10:00 AM

The False Promises of Higher Education

Danielle Henderson spent six years and $60,000 on college and beyond. The effects of that education? Not as advertised.


October 16 • 8:00 AM

Faster Justice, Closer to Home: The Power of Community Courts

Community courts across the country are fighting judicial backlog and lowering re-arrest rates.


October 16 • 6:00 AM

Killing Your Husband to Save Yourself

Without proper legal instruments, women with abusive partners are often forced to make a difficult choice: kill or be killed.


October 16 • 4:00 AM

Personality Traits Linked to Specific Diseases

New research finds neurotic people are more likely to suffer a serious health problem.


Follow us


Love and Hate in Israel and Palestine

Psychologists find that parties to a conflict think they're motivated by love while their enemies are motivated by hate.

How to Water a Farm in Sandy Ground

Physicists investigate how to grow food more efficiently in fine-grained soil.

Unlocking Consciousness

A study of vegetative patients closes in on the nature of consciousness.

Advice for Emergency Alert Systems: Don’t Cry Wolf

A survey finds college students don't always take alerts seriously.

Brain’s Reward Center Does More Than Manage Rewards

Nucleus accumbens tracks many different connections in the world, a new rat study suggests.

The Big One

One company, Amazon, controls 67 percent of the e-book market in the United States—down from 90 percent five years ago. September/October 2014 new-big-one-5

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