Focus on future to stop impulsive use of credit card

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New York: Are you not able to save money because of an impulsive urge to use credit cards? If yes, you need not necessarily have to cut up your card as new research suggests that focusing more on the future may help you reduce impulsiveness and make better financial decisions.

Simple visualisation and writing exercises designed to help people create vivid, detailed mental pictures of their future helps them to improve their financial behaviours and ultimately their lives, the study said.

"Our results suggest that by helping people to create vivid, detailed mental pictures of their future, we may be able to help them take better financial decisions," said Sarah Newcomb, Behavioural Economist at Chicago-based investment management firm Morningstar.

"We wanted to better understand the psychological factors that drive consumer spending and saving with the hope of identifying and targeting those that could potentially motivate more savings and investments among people who have adequate resources but poor financial management skills," she said.

In the study, Newcomb and her colleagues conducted an online survey of over 700 adults in the US.

Participants were asked questions designed to measure financial behaviours as well as attitudes known to be associated with saving or spending, including impulsiveness, materialism, financial literacy and the extent to which they think about the future.

As expected, the researchers found that high levels of impulsiveness and materialism were associated with poor financial decision-making (more spending, less saving).

They also discovered that while financial literacy and the way people think about the future were both associated with good financial decisions, the strongest predictor was not literacy but focus on the future.

Further analysis suggested that the only relationship that could be found among the four attitudes was between impulsiveness and future focus.

Individuals who spent more time contemplating events yet to come scored significantly lower in impulsiveness.

These findings offer a starting point for developing behavioural interventions to promote savings, budgeting, and other positive financial interventions, according to Newcomb.

The research was presented at the annual convention of the American Psychological Association in Denver, Colorado.