Monthly Finance Message:

Focus on the Future to Save More Money

October 2017

Barbara O’Neill, Ph.D., CFP®
Extension Specialist in Financial Resource Management
Rutgers Cooperative Extension

According to research by Sarah Newcomb, a behavioral economist at Morningstar and HelloWallet, people who are future-minded and think ahead have more savings than those who do not. In addition, two simple questions can accurately gauge the status of a person's financial health:

  • How far in advance do you make plans?
  • How much control do you feel that you have over events that happen in your life?

Studies have shown that “time is money.” In other words, people who focus on the future and feel that they create their own financial destiny tend to save more than others for retirement and other financial goals. When people focus on the future, they tend to be less impulsive (e.g., spending habits), regardless of their level of financial literacy.

Newcomb found that the strongest predictor of good financial decisions is not financial literacy but, rather, a focus on the future. High levels of impulsiveness and materialism, on the other hand, were associated with poor financial decision-making. For short-term thinkers, risk is not as painful as waiting.

In addition, Newcomb's research found that “power is happiness.” Empowered people are financially happier than others. Conversely, people who don't feel in control of their personal finances have been found to exhibit negative emotions about their financial status up to those earning a six-figure income.

Newcomb's research, which is summarized in her book, Loaded, has found that, the farther away something is in the future, the less people care about it. The secret to fostering future-mindedness by yourself and others is to trick your brain to think that “the far away is close.” When this happens, people care more about the future because it is psychologically close and highly emotional. The “Here and Now” is clear and intense while the “There and Later” is vague, abstract, and unemotional.

Speaking at the June 2017 annual conference of the American Association of Family and Consumer Sciences (AAFCS), Newcomb noted that helping people create mental pictures of their future life may help them make better financial decisions. Simple visualization and writing exercises can help people form vivid, detailed, mental pictures of their future to improve their current financial behaviors and the quality of their lives.

Studies have been done to confirm the effectiveness of fostering future-mindedness. Researchers at Stanford University found that subjects in a study that had a current photograph “age progressed” to show what they might look like decades into the future increased their retirement savings by 40% more compared to those who didn't use the software. NYU marketing professor and researcher Hal Hershfield found similar results.

Newcomb noted that it is not easy for people who have been “beaten down” by negative life events to become future-minded. Recalling a 1970s era study about dogs that received electric shocks, one group of dogs figured out how to take control over the situation while other dogs experienced a loss of control, developed “learned helplessness,” and passively accepted their fate. When the experiment ended, the second group of dogs had to be shown repeatedly that they actually had the power to leave the enclosure that was no longer electrified.

The experiment with the dogs (which, of course, would not be allowed today with modern research protocols) is similar to people who have learned to be helpless after a series of negative life experiences. Like the second group of dogs, “beaten down” people will need to experience many successful outcomes before they realize that they can seize control over their financial lives.

This American Psychological Association article has additional information about Dr. Newcomb's research about future-mindedness and saving. Want to be more successful with your finances? Focus less on today and more on “later.”


  1. Rutgers
  2. Executive Dean of Agriculture and Natural Resources
  3. School of Environmental and Biological Sciences