When you think about it, we all have a close personal relationship with our bank accounts.
It’s a rare day that we don’t deal with them. We stress over their failures and take pride in their achievements, and probably have more contact with them than most of our family members.
Well, it turns out this attachment may be the key to improving your savings habits.
According to online bank Ubank, if we name our bank accounts it improves our savings habits, and not just by a little. Ubank claims customers can hit their targets up to 40 per cent faster than those who just name it a number or use the bank-generated account number.
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It’s not unusual to name bank accounts. My mother had one named ‘Running away from home’ back in the 1980s that funded her annual holiday with a friend. It seems to have fallen out of fashion a bit, but Ubank thinks it should make a comeback.
If you have a separate savings account for separate goals, maybe it’s time to add a personal touch and put a positive spin on savings.
Ubank examined the data from about 8000 customers and found that the average $10,000 savings target was met in three months when the account was named using emojis.
Ubank’s chief product and growth officer, Andrew Morrison, says using an appropriate emoji for the saving’s purpose, such as a bag of cash or smiley face, motivates people to save.
“Those that didn’t name their account took five months, whereas the named account cohort was able to achieve their goals two months faster,” says Mr Morrison.
“Goal setting is deeply rooted in human psychology. It adds excitement, connection, and meaning to the here and now. Every time customers open their mobile banking app they are reminded of their goals and progress towards them.”
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Mr Morrison says that ideally you should keep the account names simple and have an ‘umbrella’ savings fund to cover each area of your finances.
“Instead of having three holiday funds, create one for a goal around entertainment/leisure, another for bills/expenses and a third or fourth for travel,” he says.
“This will give you financial stability across key areas of life and help you to stay on track.”
Ubank’s top account names include home, holiday, car, Christmas and investment.
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According to The Australian, naming accounts also holds us accountable.
Behavioural economist and author Phil Slade told the publication naming an account taps into people’s fear of loss.
“You have got a salient reminder of what you are going to lose if you don’t save for it,” he says.
“Whenever you spend out of that account you are further away from your goal.”
Mr Slade says another strategy is to reverse your thinking about savings.
“It’s not trying to save – you are trying to control your spending,” he says.
“Savings always feels like a sacrifice. Flick that mindset around to grow your wealth.”
Have you thought about naming your bank account? Do you believe it would improve your savings habits? Why not share your savings tips in the comments section below?
