A fascinating study carried out by researchers at the Stanford Graduate School of Business and Tilburg University in the Netherlands found that feelings of power affect peoples' savings decisions. In a nutshell, the more powerful you feel, the more you'll want to save money -- probably to maintain that wonderful feeling.
So, if you're having trouble setting money aside for retirement or finally tackling that budget, maybe what you really need is a little bit of power in your life.
How is that possible?
The study's authors, Emily Garbinsky, Jennifer Aaker, and Anne-Kathrin Klesse, found that manipulating people's sense of power was surprisingly correlated with financial behavior. By putting subjects in a higher chair than a peer or asking them to write about a time they felt powerful, they found that they could affect subjects' decisions about how much money to save.
Those who felt powerful saved more.
These decisions were about saving "for the future." When asked how much they'd set aside for a new BMW, the powerful subjects changed course and said they would save less than the powerless.
In other words, feeling high status encouraged savings for more actual status (through money in the future) rather than just the appearance of status (in the form of a nice car.)
It goes to show you that feeling powerful can really have a real effect on your financial decision making. This sounds very cute, but the result could actually be very, well, powerful.
Manipulate your mind to make good decisions
The beauty of research like this is that it shows the extent to which our perceptions are malleable. Armed with this kind of information, you can help to manipulate yourself into doing the things you know you should -- like saving more money or staying under budget.
How? By utilizing another cool research finding, of course.
Allow me to introduce the "power posture" -- think Wonder Woman with hands on hips or Don Draper leaning back in his chair with his feet on the desk (cape and whisky optional.) Columbia and Harvard academics Dana Carney, Amy Cuddy, and Andy Yap found that assuming such postures for two minutes literally enhanced testosterone levels and reduced cortisol, hallmarks of dominance and stress, respectively (if you have a few minutes, take a look at Cuddy's supremely interesting TED talk on the subject.)
In other words, if you act powerful, you can literally convince your physiology, and thus your self, to feel powerful.
Act powerful before asking yourself to save money
An obvious application of the two-minute trick is a job interview or public speaking engagement. Alongside the Stanford results, though, I can't help but wonder if acting more like Wonder Woman would help a lot of us take control of our finances.
Money management can make the already frazzled feel even worse. What if you reduce that stress and improve your decision-making ability simply by changing the way you carry yourself for a couple of minutes?
It's certainly worth a shot. Try your best Draper on for size and then try making important financial decisions, like the level of your 401(k) contributions or the amount you want to put aside in your savings account.
I'm willing to wager that by the time you realize you're wearing a cape (or have found the bottom of a glass of single malt), you'll have made some powerful financial moves. In any case, it certainly can't hurt to try.