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January 10, 2022

Want to save? Best to keep things simple: report

If one savings goal is a good thing, two or more should be great, right?

Probably not. Those who want to save are more apt to keep socking money away and more of it too, if they have just one goal in mind, according to research from the University of Toronto.

"If you have only one goal it puts you in a more action-oriented mindset and helps you save more," says Min Zhao, says one of the study's authors. "Too much thinking about which goal is more important keeps people from acting."

The study looked at a range of different research subjects, including modest households in rural India, middle-income Canadians, and working professionals living abroad.

Results consistently showed that a single savings goal worked better than multiple goals. Having multiple goals resulted in people thinking about trade-offs between goals, rather than focusing on implementing their savings plan.

The findings suggest that financial instututions may want to reconsider their messaging. Banks sometimes advertise a list of reasons to save, but such a message could backfire, the study suggests, because that introduces multiple goals, leading to confusion.

Truth is, most people have more than one thing (homes, education, retirement) on their mind when setting priorities. In that case, the researchers suggest finding a way to integrate seemingly competing goals into a single more abstract goal, such as achieving financial independence.

By Gordon Powers, MSN Money



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Gordon PowersGordon Powers

A long-time fund company executive, Gordon Powers now heads up the Affinity Group, a financial services consulting firm. Gordon was a personal finance columnist for the Globe & Mail for many years, has taught retirement planning...

Jason BucklandJason Buckland

The modern-day MC Hammer of money, Jason can often be seen spending cash that isn’t his with the efficiency of a Wilt Chamberlain first date. After cutting his teeth as a reporter for the Toronto Sun, he joined the MSN Money team with...