My best friend asks me recently this question: “How do you convince someone that have never saved all his or her life to start saving?”
And I realize this question is very perplexing because I could never hit the magic formula how to convinced any one who couldn’t to do it.
If I was able to, then I would have a skill that is highly sought after. If he could have approached me with this question, I am sure there are many in this world who would like to create this kind of change in their loved ones.
The biggest being their spouses sadly most of the time.
I been allocated time to think about this, and it is perplexing because everyone’s motivation is different. And one of the thought threads that spawn in my head was, if I were to create a social platform to create a network of people that build wealth or save money, the user would fulfill various wealth/saving/net worth milestones and he or she can share the status on social media.
My thoughts are that this form of peer pressure will be constructive enough for the younger generation to compare and compete with each other to build more wealth.
Well, it looks like I may be wrong on that.
Peer pressure doesn’t work quite well when it comes to saving and putting money away.
Research have shown that if someone knows that his or her peers are buying or spending this much, or are going to a health checkup, it will increase their propensity to do so themselves as well.
The USA researchers did tests to see whether peer pressure could help ramp up the number of employees contributing to opting in for their private savings program the 401k. The reaction was the opposite. Upon knowing that their peers was saving more, it discouraged them more.
What could be the reason?
What they pointed to may be perhaps that motivation and shaming, humiliation may be a fine line. It depends very much on how possible it is for people to save, that is, their income level.
Imagine finding out that not only are you way behind on your financial goals, but nearly everybody around you is way ahead of you. It’s easy to see how you might want to avoid thinking about the problem altogether.
It looks like its better not to be announcing to your friends that you are so far ahead in net worth of them and that they have screwed up their lives so badly and they should feel ashamed of themselves.
How about you guys, have you tried having this kind of motivation talk with some close friends and family members and turn out in a way that you least expected? Do share with us.
Kyith is the Owner and Sole Writer behind Investment Moats. Readers tune in to Investment Moats to learn and build stronger, firmer wealth foundations, how to have a Passive investment strategy, know more about investing in REITs and the nuts and bolts of Active Investing.
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Kyith worked as an IT operations engineer from 2004 to 2019. Currently, he works as a Senior Solutions Specialist in Insurance Start-up Havend. All opinions on Investment Moats are his own and does not represent the views of Providend.
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Lionel
Sunday 27th of September 2015
Love this post! I've always assumed that saving works the same way as other habits like exercising etc where social pressure might work, but looks like the research says otherwise. Suspect that it's also why most financial bloggers don't share their personal accounts - because it might be discouraging to their readers.
Kyith
Monday 28th of September 2015
Hey Lionel,
I also thought peer influence will work like other things, but perhaps it will still work. Have to removed the shame. Perhaps if you make 4 of you dumb, say you want to discover this together, it might still influence the 5th!