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Veterinary Practice News Editorial Blog:
Tuesday, May 6, 2008
Saving for the Future May Take 'Tricky' Creativity
By Somyr McLean Perry
Managing Editor of Vetpracticenews.com and Veterinary Practice News
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As proven by the fiercely tight financial situation this country finds itself in, Americans are the worst money savers in the world. The lifestyle of paycheck-to-paycheck living has become the norm, particularly among Gen Y and the Millennials. Spend what we make and when we make more we buy a Lexus.
Why can't we just keep the Corolla and stash the extra money for a rainy day? Because we have no self control in this instant-gratification society.
Behavioral economists theorize that in order to get us to save, we have to believe that we're not saving and eliminate the need for self control. In 2001, two then-graduate students drafted an abstract of their social experiment, the "Save More Tomorrow" program. The goal was to use behavioral economics to increase employee savings rates by offering an opt-in program in which participants committed to allocating a portion of their future pay raises toward retirement savings. In other words, if an employee gets a raise, they will save almost all of it by default and never see their paychecks decrease.
I love this idea particularly for the younger generations of employees who may not have a sense of urgency to save money. But apparently it's not just the younger generations. According to an article in Fast Company magazine called "Get Laziness on your Side" (May 2008), economists say that people will save if given an incentive, which is the premise of an employer-matched 401(k). But 30 percent of people don't even participate in employer 401(k) options.
Clearly they don't see the value in free money.
Veterinary clinics would benefit from a creative savings plan for the clinic--and for their employees--modeled after the "Save More Tomorrow" plan. It's sad that we have to "trick" ourselves into saving for the future, but I'll take some extra money any way I can get.
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