The Text-Message Savings Plan

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Do you want to save more money? A new study shows that people were able to boost their bank-account balances when they regularly received simple reminders to save via text message.

This, the modern-day version of the Post-It, is so dumb, so easy, so obvious—and yet, apparently quite effective. The study, cited in a WSJ story, was conducted in the Philippines, Bolivia, and Peru, and its authors see no reason why the results wouldn’t be the same in the U.S. From the WSJ:

The banks sent several different types of messages, including letters in Peru and text messages in Bolivia and the Philippines. Some used negative language to stress the consequences of not saving money.

“If you don’t frequently deposit into the Gihandom Savings account, your dream will not come true,” warned one message in the Philippines.

While positive or negative language didn’t have a significant effect on the savings rate, mentioning a customer’s specific goal did. When reminders mentioned incentives offered by the bank for consistent deposits, bank savings increased by almost 16%.

Wow! Pulling out the “your dream will not come true” line—that’s playing hardball. I wonder what the results would be if there were messages like, “If you buy another pair of shoes, your children will be born with horrible disfigurements,” or “If you take your paycheck to the race track rather than to the bank, your wife will have an affair with that guy at the gym who is always staring at her boobs.”

Overall, the study’s little reminders resulted in a 6% increase in savings. That’s not earth-shattering, but for many people, 6% can be the difference between breaking even, going into debt, or being able to afford braces for their kids’ teeth.

This goes to show you that it’s often the simple things that enable people to save. A little text-message reminder does the trick. So does a simple affirmation of what’s important in your life: According to Consumer Psychologist Kathleen Vohs, when you’re out shopping, taking a moment to think about what you truly value in life increases your self-control—and thereby decreases the likelihood of you making foolish impulse buys.