February 23, 2021
Converting a Desire to Save into Saving
Save. Budget. Spend less on takeout.
“We know what we need to do,” financial behavior expert Wendy De La Rosa says. “The question is how to do it.”
Consider one of the pandemic’s lessons for workers: it’s important to build up an emergency fund for a potential financial catastrophe. But how to translate that into action?
De La Rosa, who founded the Common Cents Lab to help low-income workers manage their limited resources, has conducted research showing that people can overcome the psychological barriers to saving by changing the financial cues around them.
In this Ted video, she provides three practical tips, one of which she applied to her own life. After spending $2,000 in a single month on a ride-sharing app in Manhattan – “death by 1,000 cuts” – she vowed not to do it again. She did it again anyway.
So, she changed her financial cues. She deleted the credit card attached to her app and linked the app to a debit card with a $300 limit per month.
To change behavior, De La Rosa said, “change the decision-making environment.”
Read our blog posts in our ongoing coverage of COVID-19.
Squared Away writer Kim Blanton invites you to follow us on Twitter @SquaredAwayBC. To stay current on our blog, please join our free email list. You’ll receive just one email each week – with links to the two new posts for that week – when you sign up here. This blog is supported by the Center for Retirement Research at Boston College.