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Inside: Motivation and Financial Behavior
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Four behavioral economics strategies for improving consumer financial health

At Common Cents Lab, a financial research lab at Duke University supported by MetLife Foundation, we believe behavioral science can help improve financial well-being. For the past two years, we’ve been applying our insights and an experimental mindset to work with fintech companies, credit unions and nonprofits in order to test this assumption.

Twenty-six experiments in, we thought it was time to assess our progress and share what we’ve learned with the industry. Below are four strategies we have used in the field and examples of our work to tactically show how they manifest in market. Our hope is that these four strategies can help other companies leverage human nature to make it easier for low- to moderate-income households improve financial decision-making and their own well-being.       
To read more click here.

Why ‘nudging’ works: People need a push when it comes to retirement savings

Studies show that we are living longer and retiring later, but too many of us are not adequately preparing for retirement. People who do not save for retirement often do not have access to an employer-run retirement program, do not understand how much money they will need to save, or lack the financial knowledge to make the best investment decisions.

For many, working longer seems to be the new retirement strategy.

There are many reasons why individuals do not always act in their best interests when it comes to saving for retirement. In his book “Misbehaving – The Making of Behavioral Economics,” Nobel Prize-winning economist Richard Thaler identifies some reasons why people often fail to save for retirement. These include inertia that keeps people from even taking action to begin to save; loss aversion that keeps people from taking actions that reduce their paycheck; and a short-term focus on actions that provide immediate gratification rather than planning for the future. Click to read more.

Smart People Make More Money. So Why Aren’t They Saving More?

There’s an old saying that many attribute to Warren Buffett: “The more you learn, the more you earn.”And there’s some truth to that. An Ohio State University study found that the difference in having an average IQ of 100 and an above-average score of 130 translates into earning between $6,000 and $18,500 more a year.

But that same study found that there’s actually no strong relationship between those higher incomes and actually building wealth. There’s little evidence, for instance, that higher intelligence correlates to better financial behavior, such as not running up credit card balances. Yet there’s some evidence that people with higher IQ’s may not be saving as much as other folks.

Nowhere is this disconnect between intelligence, income, and savings more evident than in recent patterns on where the best and the brightest are moving to and where America’s best savers live. Click here to read more. 

The PFW Scale™ is an effective way to evaluate employee financial stress. Click here to learn how your organization can benefit by using the Personal Financial Wellness Scale™
Personal Financial Employee Education Fund (PFEEF)
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