While the Netherlands is slowly but surely transforming from a welfare state to a private equity firm, with households increasingly responsible for wealth creation, our study shows that household savings are actually leveling off.
What We See
We also see that since the financial crisis, Dutch households are even more reluctant to invest than before the crisis. One in five households indicate that they do not invest because they do not have sufficient income or capital and more than two in five households do not even have sufficient savings on hand as a buffer for necessary expenditure.
More than half of the households in our study also indicate that it is not possible to increase the financial buffers because too little money remains. How can we tempt Dutch households to spend less, leaving money to save or invest? You can Read more now.
Help save money
Abstract versus concrete
The socio-psychological Construal Level Theory teaches us that we collect and process information on two levels, an abstract and a concrete level, and therefore arrive at different conclusions with the same information. At the abstract level we mainly focus on the ‘why’ and in a concrete mindset on the ‘how’. If you imagine that you are looking at a painting from an abstract mindset, you search for ‘why’ the painter made the painting and you look for the story behind the work. If you look at the painting from a concrete mindset, you look for ‘how’ the painting was made, with which brushstrokes or which colors. If you now have to judge what you think of the painting, you can come to completely different conclusions based on the two mindsets. From an abstract mindset you can find the story behind the painting beautiful or inspiring, but from a concrete mindset you cannot like the painting, because it consists of sloppy brushstrokes or ugly use of color.
Target pairs
The fact that the two mindsets lead to different conclusions is also visible in studies on saving behavior and the willingness to save. The research shows that an abstract mindset increases the willingness to save. People in an abstract mindset allocate more money to long-term goals, while a concrete mindset leads to spending money on luxury products. An abstract mindset emphasizes the usefulness of savings to achieve long-term goals, while the concrete mindset emphasizes how the money can be spent and accentuates the pleasure of spending now.
Although one person naturally thinks more abstractly than the other, it is possible to influence this way of thinking simply by (repeatedly) asking ‘why’ you are going to do something. For example, by asking about the purpose of saving or investing. In the banking sector, we therefore see parties that are responding to this to a certain extent with products such as target savings or target investments.
Target savings for your child
With target savings or target investing, a consumer can create a pot for the savings or put a name on it, however, really asking the ‘why’, which triggers consumers to think more abstractly at the time of closing or when setting a periodic interference to the savings or investment account does not occur.
