Finance

Saving and old habits

July 20, 2015

Saving, an old Dutch tradition.In recent weeks, new figures from Statistics Netherlands shows that the Dutch are once again fully engaged in saving money for later. But why do they do that? What do they save money for? And is saving money a wise thing to do now that interest rates have reached record lows? Researchers from the Financial Planning LAB investigated the causes behind Dutch saving behavior.

Age-related

In a large study among more than 1,300 Dutch households, the researchers from the TIAS Financial Planning LAB looked for causes that could determine why the Dutch have developed the tendency to save their money.  It shows that they save more when they were taught to do so by their parents. Certain personality traits also play a role. Saving happens most often in forward-looking, financially interested households that keep their affairs well organized. Age also plays a special role. The urge to save decreases as age increases. On the one hand, this is logical because the motivation to save is weakened by the shorter horizon at higher ages. On the other hand, it is striking because the income generally increases with the working years and you can expect an increased savings capacity at higher ages.  The red line in the figure shows how the willingness to save decreases with age.

Generational effect

Perhaps the most interesting result concerns the clustering of a tendency to save among certain generations. Some generations seem to want to save more than others throughout their entire lives. The researchers looked for an explanation for this generational effect in the years of the respondents’ youth. It appears that the current tendency to save is strongly related to the economic situation in one’s teenage years. Teenage years determine our lives in many ways, and it also appears here that when you grow up in tough economic times you will have a life long tendency to save windfalls. The gray bars show the economic growth in the weakest year during the teenage years. It shows that respondents in the 45-50 age group were teenagers in a period when the economy contracted by 1.5% and will therefore still save more than the generations before and after them.

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CBS: voor onze huidige spaartegoeden (in Dutch)
DNB: over Nederlandse vermogensposities en spaarprikkels (in Dutch)
NIBUD: over sparen (in Dutch)

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