Tips | October 27, 2015

Do you “put your money where your mouth is”?

They say you should “put your money where your mouth is” to support by actions not just words.

But words themselves appear to play a role in the way people think about money. The way we talk about spending, borrowing, saving and investing may actually influence success in achieving goals.


1. Try saying “I don’t” rather than “I can’t” When trying to change a money habit, empowering language might help. A Psychology Today blogpost gives the example of saying “I don’t buy lottery tickets” rather than “I can’t buy lottery tickets”. The first highlights the fact that the speaker has made a choice and is in control. The post suggests the technique can be helpful for New Year resolutions, boosting willpower and increasing the likelihood of achieving the goal.

2. Does “positive” framing cost you? Some credit card statements present the amount owed as positive (and indicate a surplus of funds as negative). But the Nudge blog suggests reframing the statements might prevent people from overspending. It gives the example of a card with a $10,000 limit and $8,500 spent. It suggests that framing the credit card bill as a debt of -$8,500 (rather than the opportunity to spend another $1,500) “makes you feel that you should move up to zero, rather than trying to stay below $10,000”.

3. The future is uncertain In his blog post for eZonomics on how culture shapes the way people think about money, economist Chris Dillow suggests language plays a role too. He writes, “we speak of the future as something ahead of us: we look forward to it. I suspect – but cannot prove – that this imparts a nasty bias to our thinking”. If the future is ahead of people, it might suggest they can predict it. In reality, many things – including aspects of financial markets – are uncertain and this affects the level of risk.

4. Rose-tinted memories? The way we think about the past appears to play a role too. The book The Time Paradox, detailed in an eZonomics blog post by behavioural economist Nathalie Spencer, suggests people who focus on the past and think about the good old days (referred to as past-positive) tend to be frugal, risk-averse, and avoid debt. However, if they dwell on the negative aspects of the past (past-negative), they may be more likely to try different financial strategies than they have previously.

5. I don’t have a word for that In a famous series of experiments in the 1960s and 70s, children were asked to delay the instant gratification of eating a marshmallow now for the reward of an extra marshmallow later. A discussion paper published by Germany’s IZA in 2015 suggests language may play a part in the tendency to delay gratification. It says that some languages grammatically separate the future and the present (such as English or Italian), while others allow speakers to refer to the future by using present tense (such as German). German-speaking primary school children were found to be about 46% more likely than Italian-speaking children to delay gratification in a choice experiment, the report says.

6. New name, new perception Economies have traditionally been regarded as developed or developing but the creation of the term BRICs in 2001 changed that, according to this paper. The BRIC economies are Brazil, Russia, India and China (sometimes with the addition of South Africa). The study argues that the BRIC concept changes the way investors think about a selective group of emerging markets – reframing and describing them as “solid, long-term investment destinations”.

eZonomics team
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BehaviourGoal setting

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