What is the psychology behind automatic savings strategies?
The psychology of automated savings utilizes our natural biases and habits to make saving easy and effective. The “out of sight, out of mind” principle means that when money is automatically transferred to a savings account, we see it as less available, reducing the temptation to spend it.Automatic savings also helps us form positive financial habits, as regularly setting aside a portion of our income becomes a natural part of our routine. Leveraging these psychological tendencies is a powerful tool in building wealth over time through automated savings.