A while ago, I watched this TEDTalks video by economist Shlomo Benartzi called Saving for tomorrow, tomorrow. Although it’s a few years old, and is based on U.S. data, many points resonated with me and still do.
Benartzi discusses how the general population’s lack of saving is a result of behavioural challenges related to self-control, loss-aversion and immediate gratification, and presents a solution to help increase savings. These concepts fall within his area of his expertise, which is called behavioural finance. In fact, a Bloomberg article discusses the growing influence of behavioural finance in many different, and even unsuspected, industries, and how it’s changing the way organizations reach their target markets.
I thought it was particularly interesting when Benartzi discusses a study of people who contributed to their retirement savings following the “save more, tomorrow” strategy, at 12:00 in the video.
Why does this matter? Keeping in mind my post on career transitions, I hope that many of you are progressing in your careers in a positive trajectory. As you move up in your roles – and your compensation moves up accordingly – I think it’s a great idea to keep this “save more, tomorrow” strategy in mind. Remember to “pay yourself first” by contributing to your savings incrementally. It will pay off!
What did you think of the tips in the video? Share in the comments.
Image credit: Pixabay.com.