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Our emotions play a key role in shaping our financial habits and behaviors. A recent study led by financial psychologist Dr. Brad Klontz shows that our memories also have a significant impact.
In a study commissioned by Capital One, Dr. Klontz and his team from Creighton University examined the connection between happy memories, keepsakes, and financial choices. They divided participants into two groups: a control group and an experimental group. The experimental group was asked to bring a nostalgic item or a photo of one to the study.
While the control group viewed a presentation on the importance of saving and various saving techniques, the experimental group did not. Instead, Dr. Klontz explains in Psychology Today how this group's experience differed:
The experimental group participated in an immersive, emotion-driven presentation that aimed to evoke positive memories and emotions tied to their nostalgic items. After these feelings were stirred, the session focused on identifying these emotions and the values linked to their nostalgic items, exploring how these emotions could influence their future savings goals.
In simple terms, the researchers sparked positive emotions related to saving in the experimental group, while the control group only received typical financial advice. For the following weeks, the researchers tracked the savings habits of both groups. What did they find?
The control group increased their savings by 22%, while the experimental group saw a massive 67% increase—three times higher than the control group’s gain.
This shows that personal finance is more about emotions than numbers. You can master the basics of Money 101, but at the end of the day, it’s the emotional aspects that truly drive financial behavior. As Klontz summed up, 'We must engage our emotional brain if we want to change our financial behaviors.'
Drawing from the study’s findings, Klontz suggests several exercises to help you develop healthier money habits. For example:
Think of an item you’ve kept for sentimental reasons. Hold it in your hands and reflect on how it came into your possession and its significance to you. Did a grandparent or parent give it to you, tying it to feelings of family love and support? Is it from your childhood, evoking a sense of safety and security? Or perhaps it’s from a memorable vacation abroad, symbolizing adventure and treasured experiences you hope to continue in the future?
Next, reflect on the values and emotions tied to that keepsake. As Klontz highlights, your responses will likely reveal your core priorities. You can then align your savings goals with these values. He also recommends a simple trick—give your savings account a meaningful name, a suggestion we've shared before as well.
For additional tips and more insights from the study, check out Klontz’s full article here.
