University of Southern California

Getting Consumers to Save More
October 19, 2011

Improving consumers’ financial decision making and increasing personal savings is important for consumers, governments, policy makers, banks and financial advisors. The problem is that we (as consumers) don’t save enough. Why? Lots of reasons….

  • We spend more than we thought we would (how did I spend $250 at Costco?)
  • We make fundamental budgeting errors (Is the roof really already 20 years old?)
  • We place more focus on the present (how cool would that vacation home be) than the future (how critical will that retirement home be)

We are influenced by a consumerist culture (Like my Prada bag?)

So what’s to be done? USC Marshall’s Assistant Professor Gülden Ülkümen and her co-author Amar Cheema have proposed and tested a financial intervention that can help.

In multiple studies, the authors examined consumers’ self-selected savings goals. They found that two aspects of these goals influence saving success:

  • Whether consumers are big picture thinkers who focus on focus on why to save or whether they are more narrowly focused on how to save
  • Whether savings goals are non-specific (e.g., " need to save as much as I can"), or specific (e.g., "I need to save $5,000")

Big picture thinkers who envisioned why they were saving, tended to save more when they had a specific monetary goal in mind.

More narrowly focused individuals who thought about the mechanics of how they would save saved more when they practiced steps towards savings without having a specific goal. In fact, the study found that those who tended to focus on both a specific goal and how to save for it, got so wrapped up in the task of saving that they became too overwhelmed and stopped saving.

The findings were the same regardless of the difficulty of the savings goal and whether the savings goal was established to secure something desirable (e.g., saving for a vacation) or avoid something undesirable (e.g., saving to avoid running out of money).

Timing and its relation to Savings Strategies

According to the study’s results, “different consumers need different strategies to increase their savings.” Armed with this knowledge, says Ülkümen, financial advisers should ascertain what type of saver their client is—if they tend to focus on why or how they are saving—and tailor their approach accordingly. While financial advisors cannot very well administer personality tests, they should ask their clients telling questions about their savings goals.

Time is a key factor to consider in any savings strategy. The timeframe in which one needs to save, the researchers contend, naturally sets one up in a high/low-level construal mindset. Savings for a month versus an occasion for three years from now—automatically imposes a certain construal level.

Based on these goals financial advisors should help clients employ different strategies to address the different savings goals throughout their lifetimes albeit saving for a vacation a month away, college tuition, or retirement.

The Bottom Line: When it comes to personal saving goals, you'll achieve the best outcome when you align what you (as a consumer) or your consumer clients focus on (why or how to save) with the specificity of the goal at hand.

Ulkümen, Gülden and Amar Cheema (2011), "Framing Goals to Influence Personal Savings: The Role of Specificity and Construal Level," Journal of Marketing Research, forthcoming. To learn more about Professor Ülkümen and her work on budgeting, please see