Question of the Day: Consumers were invited to sign up for an automatic savings program...
- What percentage enrolled when given the option to save $5/day?
- What percentage enrolled when given the option to save $150/month?
Consumers were invited to sign up for an automatic savings program:
- 30% enrolled when given the option to save $5/day
- 7% enrolled when given the option to save $150/month
- Have you ever set a savings goal? What were you saving for? What helped you achieve the goal?
- Saving $5 per day or $150 per month results in the same amount saved in a month. Why do you think that 4X more people chose the option to save $5/day instead of the $150/month option?
- Your friend says the key to being a good saver is to set annual goals. "Having a big number, like trying to save $3,000 a year will be a great motivator for most people." Do you agree or disagree with them?
Behind the numbers (Shlomo Benartzi website):
To see if we could help more users enroll in the automatic deposit program, Hal, Steve, and I experimented with several different versions of the same question. On the enrollment screen, users were randomly assigned to one of three categories. Some were asked if they would like to a save $5 every day, some were asked if they wanted to save $35 a week, and some were asked if they wanted to save $150 a month. While only 7% opted to save $150 a month, nearly 30% decided to save $5 a day. That’s a huge shift in choices, especially since the amounts are all essentially equivalent. Saving $5 a day makes us think about skipping a Starbucks latte (that seems doable), while $150 a month makes us think about car payments, which is a more daunting amount to give up.
Want to help your students set savings goals? Check out this NGPF Activity, CREATE: Your Savings Goals
About the Author
Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.
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