Contrary to the assumption that individuals anxious about the future would save more money out of caution, research indicates that optimists are actually better savers. A new study reveals that optimism has a stronger correlation with saving behavior than pessimism, which often prompts saving out of fear of emergencies.
Lead author Joe Gladstone from the University of Colorado Boulder stated that while optimism is frequently viewed as leading to less saving, it can serve as a valuable psychological asset that encourages saving, particularly during economic difficulties.
The study analyzed data from eight surveys conducted in the U.S. and Europe, involving over 140,000 participants. These surveys assessed participants’ income, savings, and total assets, alongside their agreement with optimistic statements like “I expect more good things to happen to me than bad.”
Optimists tend to remain hopeful about positive outcomes even amid challenges, which may enhance their financial planning. This relationship between optimism and saving habits was notably stronger among lower-income individuals.
Gladstone noted that for those living paycheck to paycheck, saving can seem pointless, but maintaining an optimistic perspective can motivate them to set aside funds despite current difficulties.
The analysis showed a consistent link between optimism and improved savings habits, with significant findings: for individuals reporting greater optimism, savings were notably higher. Specifically, a one-standard-deviation increase in optimism corresponded to an average increase of $1,352 in savings for households with a typical savings balance.
Moreover, optimists not only had higher savings but also achieved better investment returns than their pessimistic counterparts, likely due to setting more ambitious savings targets and demonstrating the determination to meet those goals.
The research suggests that strategies to foster optimism should be integrated into financial education and programs aimed at enhancing savings, particularly for low-income groups who generally save less.
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