Saving money is difficult. It can be particularly difficult for the poor who live day-by-day and do not have much disposable income, and those who live in poorer countries who do not have access to financial institutions.
One of the reasons why saving is hard can be explained through the theory of loss aversion. People may feel loss by giving up a portion of money to a saving account because it prevents them from gaining something with that money.
Another reason can be because it requires the formation of a new habit and the displacement of an old one. Old habits are hard to break and new habits can be difficult to form because of our innate behavioural patterns we repeat as habits. When behaviour becomes habitual, it is guided by automated cognitive processes, and is not associated with elaborate decision processes. However, through repetition, it’s possible to form new habits and maintain them as well.
Saving money can be difficult in the short run but there are ways to overcome the pains and the fact that many poor people see the need save proves that the benefits can be tremendous.
Read the full article written by Roxanne Bauer published on NextBillion here.
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