New research out of the University of Kansas’s School of Business is showing that those who consolidate their savings into a single account, rather than spreading it out across several, encourages saving. Led by assistant professor Promothesh Chatterjee, the study was actually four separate studies with a total of 566 participants. In these studies, participants could earn money for doing things and spend it on products. They discovered that those who maintain one account versus multiple accounts had a higher rate of saving. The theory was that people are predisposed to spending money, rather than saving, and that this is facilitated by vagueness. If you have multiple accounts, it’s not readily apparent how much you’ve saved. When you know exactly how much you have saved, you are less likely to spend the money.
So the issue isn’t so much one bank account versus five, it really comes down to knowledge and understanding how much you’re saving. It’d interesting to find a way to do a study in which you replicated this scenario but offered them a Mint-like financial aggregator that collected all that information for you and find out the impact of that knowledge.
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