{"id":1107468,"date":"2019-03-26T16:20:29","date_gmt":"2019-03-26T16:20:29","guid":{"rendered":"https:\/\/dailyreckoning.com\/?p=107013"},"modified":"2019-03-26T16:20:29","modified_gmt":"2019-03-26T16:20:29","slug":"3-ways-to-grow-your-savings-by-thousands-of-dollars","status":"publish","type":"post","link":"https:\/\/juniorminingnews.com\/?p=1107468","title":{"rendered":"3 Ways to Grow Your Savings by Thousands of Dollars"},"content":{"rendered":"

This post 3 Ways to Grow Your Savings by Thousands of Dollars<\/a> appeared first on Daily Reckoning<\/a>.<\/p>\n

Do you ever wonder why lottery winners sometimes go bankrupt, even after winning big? Why some people keep balances on their credit cards and pay high interest rates when they have savings available to pay the bill?<\/span><\/p>\n

And why it seems so hard for Americans to set aside regular savings for retirement, even though they know they should?<\/span><\/p>\n

These paradoxes can all be traced back to one concept you may have noticed is gaining attention as of late: behavioral economics.<\/span><\/p>\n

The idea of psychology as a driver of economic action dates back at least to Adam Smith\u2019s The Theory of Moral Sentiments <\/i>(1759). Behavioural economics has, however, only in recent years been getting more popular. <\/span><\/p>\n

In 2017, the Nobel Prize in Economics was awarded to Richard Thaler, professor of behavioral science and economics at the University of Chicago Booth School of Business. Dr. Thaler\u2019s research looked at why people often make irrational decisions with their money. <\/span><\/p>\n

Instead of acting rationally and having self-control, we tend to get easily distracted from long-term goals by short-term rewards, we often make poor financial decisions when we know better, and we give in to impulses way more than we should. <\/span><\/p>\n

The bad news is marketers have figured this out and they\u2019re constantly sending you small \u201cnudges\u201d telling you about special offers, limited-time sales, and never-before-seen deals encouraging you to spend your money now instead of saving it for tomorrow. <\/span><\/p>\n

The good news is you can apply these same psychological strategies to boost your retirement savings.<\/span><\/p>\n

Using Small Nudges to Improve Your Savings<\/b><\/span><\/h2>\n

In 2008, Dr. Thaler and Cass Sunstein, a legal scholar, wrote a book called Nudge: Improving Decisions about Health, Wealth, and Happiness<\/i>. Dr. Thaler defined nudges as something that “alters people’s behavior in a predictable way without forbidding any options or significantly changing their economic incentives. To count as a mere nudge, the intervention must be easy and cheap to avoid.”<\/span><\/p>\n

“Nudges are not mandates,” the authors write: “Putting fruit at eye level counts as a nudge. Banning junk food does not.”<\/span><\/p>\n

This idea of nudging extends beyond health and personal finance. Several countries around the world, including Britain, Germany and Japan have started implementing \u201cnudge units\u201d within their governments to change citizen behavior. <\/span><\/p>\n

But for today\u2019s discussion we\u2019ll focus on how you can use little nudges to save more, invest more, and meet your retirement savings goals faster. <\/span><\/p>\n

Nudge 1: Commitment Devices<\/b><\/span><\/h2>\n

Commitment devices are voluntary, binding arrangements that people make to reach goals that may otherwise be hard to achieve. Commitment devices are not a new concept. <\/span><\/p>\n

From \u201cChristmas club accounts\u201d designed to help you save for holiday expenses, to CDs, financial providers have offered commitment savings products for decades now.<\/span><\/p>\n

Why do commitment devices work?<\/span> <\/b><\/span><\/h3>\n