Thousands of Australians will take part in a huge savings experiment as Cotton On Group partners with start-up bank Volt to boost staff, and ultimately customers’, savings.
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The plan, announced on Tuesday, will see Cotton On team members take part in the Volt Savings Challenge to improve workers’ financial literacy and spending habits. Cotton On Group employs 22,000 people globally.
The savings challenge will be introduced to Cotton On staff first, then to customers who are Perks members.
What’s the challenge?
Over six weeks, team members and customers will set savings targets and be sent “gentle reminders” for weekly savings.
The idea is that savers set themselves a small and achievable target, before going on to build on it.
“Put some money aside. Do it again, and again. Six times all up, either weekly, fortnightly or monthly. We'll remind you when to drop the money in,” Volt explains on its website.
“Your habits are the things you do without thinking. So, if you can train your brain to automatically do things that boost your bank balance, you’ll be better off.”
Ultimately, at the end of the six-week period, the saving habit should be “embedded behaviour”, Volt Bank explained.
“The partnership will help us continue to show millions of Australians how to quickly develop and improve their savings and spending habits,” Volt CEO and co-founder Steve Weston said.
The savings experiment incorporates the behavioural science concept of nudge theory, that is, that small “nudges” can lead our brains to make better short term decisions and build stronger behavioural pathways over time.
Behavioural economist and Nobel prize winner Richard Thaler brought the theory to prominence with Nudge Theory, the book he co-authored with Cass Sunstein in 2008.
Thaler won the 2017 economics Novel Prize for his work in behavioural economics, which rested on the idea that people don’t act rationally, but that small nudges can prompt better decisions.
It’s not just Volt getting in on the action either; millennial super fund Zuper launched its Wealthness program in February last year, which also incorporates behavioural finance concepts.
The program uses Wealthprint to help users track their financial behaviours and highlights trouble spots.
“By combining theoretical knowledge from across the behavioural psychology spectrum, and pattern mapping across transactional and environmental data, Wealthprint explains to members how their brain works on money,” Zuper founder Jess Ellerm said.
“From there, Wealthprint is able to assist Zuper members develop a personalised action plan to modify certain behaviours that are potentially causing them financial harm, and nudge them towards positive behaviours and habits correlated with financial success.”
ING Bank is also helping customers save without realising: its ‘If This Then That’ (IFTTT) programs ties certain triggers to savings.
“Every time a trigger occurs, funds will automatically be transferred from your Orange Everyday to your Savings Maximiser account,” the bank explains.
For example, users can link their account to a weather forecast and then deposit a certain amount for a holiday every time the weather drops below a certain temperature.
It also lets users link their IFTTT account to eligible fitness apps, and then save money every time they hit their step or calorie goals.
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