Evolutionary Psychology and Money-Saving Motives
When asked about themselves, people are ready to talk the ear off of anyone willing to listen. However, when not fully realizing the motivations behind their actions and opinions, those same people often make mistakes in their thinking and, thus, create a say/do gap in which their actions do not match their words. The misinformation leads executives to create products and services designed for the wrong problem – and marketers to build strategies based on what people say they want and not what they need.
At first glance, it seems as if all consumers have unique reasons for saving money based on life circumstances like income, education, family size, location, and personal preferences. And they are likely to tell you that. However, when saving patterns are viewed through the lens of psychology, it becomes clear that inherent evolutionary traits subconsciously affect how people save their money, and their reasons become predictable patterns that executives and marketers can plan for.
To better grasp the psychology of saving, we analyzed the survey results from more than 1,000 Americans on a budget and found trends between their age and gender and how they spend and save money. We couldn’t take the results at face-value, as we’ve learned that people don’t always understand why they make certain decisions. To help identify the subconscious drivers behind the data, we consulted professors from The Chicago School of Professional Psychology, who linked the trends to evolutionary psychology – a biologically informed approach to the study of human behavior based on the theory that the same instincts that helped our primitive ancestors survive and reproduce are exhibited in the actions of humans today.
At Brandtrust, we’ve learned through 20 years of deep subconscious research that decoding the unspoken motives of consumers will help marketers understand what their audience wants and why and, therefore, better tailor campaigns to subconscious desires. What is most important to each generation and why? What is each gender focused on and why? How does millennial budgeting differ from the budgeting of Gen Xers and baby boomers? We have all the details.
THE BASIS FOR BUDGETING
Understanding how evolutionary instincts of survival and reproduction influence each generation will help marketers better appeal to their target audience by knowing what audience members are subconsciously aiming to accomplish at any given stage of their lives.
The Instinct Theory of Motivation states, “Every organism is born with different biological traits and tendencies in order to help them survive. These aren’t learned or experienced behaviors, rather patterns of behavior that occur naturally and are goal-directed. These patterns of behavior are referred to as instincts, and the theory suggests that instincts drive all behaviors.” As with most life stages, focuses and goals shift to match a person’s age, and this is no different when it comes to motivations for saving money.
According to Elizabeth Schwab, Psy.D., the associate department chair of The Chicago School of Professional Psychology’s Business Psychology Division, members of the younger generation are preparing for the future survival of themselves and their eventual mates, and are focused on paying off their college educations or large purchases and saving for large purchases to be made for the family they’ll create.
The middle generation is focused on the present and future survival of their family by paying off home and car loans and saving for purchases that will benefit their children. The older generation is paying off medical debt and miscellaneous debt accrued throughout their lives and is focused on living out the remainder of their lives comfortably. Each generation places an importance on paying off debt accrued when trying to meet a previous life stage goal while simultaneously attempting to achieve their current life stage goal.
Understanding how evolutionary psychology and life stage theory directly influence the main reasons each generation breaks their budget will help when marketing luxury, nonessential items to a specific age group.
The top reasons each age group breaks their budgets directly align with Erik Erikson’s Stages of Psychosocial Development. This theory identifies a series of eight stages the developing individual should pass through from infancy to late adulthood, and stages six, seven, and eight coincide with the ages of our survey respondents. According to Erikson, all stages are inherently present at birth and unfold throughout one’s life. Each stage presents new virtues and challenges that the person confronts and, hopefully, masters.
From ages 20 to 39, the virtue is love, and the challenge is finding and maintaining friendships and romantic partnership to avoid isolation. Therefore, the younger generation is trying to facilitate mating goals with alcohol, clothing, and entertainment to attract partners and ensure social status and activity. From ages 40 to 64, the virtue is caring, and the challenge is nurturing and guiding the younger generation in an attempt to contribute to the future.
Here, the middle generation shifts to childbearing and rearing and begins to focus on meeting their children’s needs instead of their own to ensure a legacy. For those 65 and older, the virtue is wisdom, and the challenge is to become content with the entirety of one’s life. The older generation now switches back to focusing on themselves but in a reflective capacity, making sure they have no regrets while also dealing with increasing health emergencies.
Breaking budgets for food and nonalcoholic beverages is most common across each age range, and motivations are different for each generation and each person, however grabbing a quick bite or coffee out of convenience, and spending time with friends and partners by going out to eat at restaurants are common throughout all generations.
With the knowledge of how each gender’s spending and saving motivations stem from survival instincts of their primitive ancestors, companies can understand what is subconsciously most important to each gender, allowing for better target marketing strategies.
Ever since our earliest ancestors began walking upright more than 6 million years ago, evolution has been at play, slowly shaping the human being’s physical makeup to meet their most important goals: survival and reproduction. And while the present day human’s outward appearance has changed drastically over millions of years, his or her goals have not.
Jeremy Nicholson, M.A., Ph.D., an assistant behavioral economics professor at The Chicago School of Professional Psychology, said evolutionary psychology could also be used to explain the difference in gender spending and savings, as our instinct for self-preservation is hardwired. In the world of our human ancestors, men were focused on the long-term survival of themselves and their lineage, and provided protection from threat and shelter from natural elements.
That same survival instinct now translates to the future-minded savings patterns of men, who appear to place importance on saving for large future purchases for themselves and their families, as well as retirement. Nicholson added that women were more reproductive-oriented and placed a high importance on finding the perfect mate and ensuring the survival of themselves and their lineage in the immediate future and were tasked with everyday child-rearing duties. This same survival instinct now translates to a present-minded savings plan for women, who are more focused on what they need now to be successful, whether it be in the jobforce, raising children, travelling, etc.
This asset gives a snapshot of how millennial spending compares with the spending of older generations and can be used by companies when marketing to targets in their 20s and 30s.
Labeled as the first generation to save for long-term financial freedom instead of retirement, millennials are more likely to save money to live comfortably throughout their lives rather than wait until retirement to spend their savings. Millennials are pegged as the generation that saves the least amount of money per year; however, according to a 2017 Merrill Edge report, the millennial generation is saving the most. The report states millennials are saving an average of 19 percent of their annual income compared to the 14 percent saved by Gen Xers, 14 percent saved by Baby Boomers, and 12 percent saved by the Silent Generation.
The above information explains why the younger generation is more likely to pay for luxury items such as music services, meal delivery kits, and gym memberships, and also spend extra money to buy organic produce and brand-name products. Technology also plays a role in explaining the generational shift in this asset’s data. The younger generation has been more exposed to the internet and, therefore, is more likely to use it to listen to music and read news and magazine articles for free, whereas the older generations have held tight to paying for physical copies of newspapers and magazines, and use the radio, CDs, tapes, and records for their musical entertainment.
THE SUBCONSCIOUS ALWAYS SHINES THROUGH
The above glimpse into savings trends of budgeters yielded several interesting takeaways. Even if they aren’t aware, consumers’ deeply rooted instincts affect their decision-making process when it comes to saving money. It’s important for marketers to understand the intrinsic factors at play and how to use them to their advantage when appealing to specific age ranges and genders.
If you want to learn more about how the subconscious affects decision-making, visit Brandtrust today. We employ methodologies rooted in applied social and behavioral sciences that unlock the unconscious needs and desires of consumers – the things consumers won’t or can’t tell you. We’ve also created and use a Truth, Clarity, Action Framework to deliver clear, strategic blueprints for brand, innovation, and customer experience teams.
We surveyed more than 1,000 Americans through Amazon Mechanical Turk on the ins and outs of their budgeting, saving, and spending. We then consulted our experts in behavioral psychology at The Chicago School of Professional Psychology for explanations of the data trends. Next, we researched evolutionary psychology and life stage theories to explain the mechanics behind budgeters’ motives further.
- Jeremy Nicholson, M.A., Ph.D., Assistant Professor of the Behavioral Economics Department, The Chicago School of Professional Psychology, Online Campus
- Elizabeth Schwab, Psy.D., Associate Department Chair of the Business Psychology Division, The Chicago School of Professional Psychology, Online Campus
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