1 00:00:07,133 --> 00:00:10,453 Speaker 1: You're listening to the Saturday Morning with Jack team podcast 2 00:00:10,573 --> 00:00:11,693 Speaker 1: from news Talks at B. 3 00:00:12,773 --> 00:00:15,173 Speaker 2: Well, the latest economic data was out this weekend. It 4 00:00:15,293 --> 00:00:19,253 Speaker 2: priints a pretty grim picture of economic activity in New 5 00:00:19,333 --> 00:00:21,053 Speaker 2: Zealand at the moment. I think a lot of us 6 00:00:21,053 --> 00:00:23,813 Speaker 2: are looking at any way to save a bob or two, 7 00:00:23,933 --> 00:00:29,013 Speaker 2: not just by avoiding splashy purchases like brand new chrome 8 00:00:29,213 --> 00:00:33,893 Speaker 2: coffee machines. But Ed McKnight, our money guy from Opie's Partners, 9 00:00:33,933 --> 00:00:37,293 Speaker 2: is here this morning with some saving tips backed by science. 10 00:00:37,413 --> 00:00:39,693 Speaker 1: Gotta Ed get a Jack. 11 00:00:40,293 --> 00:00:43,093 Speaker 3: It's start off with some mental accounting and there are 12 00:00:43,093 --> 00:00:45,293 Speaker 3: some kind of simple rules of threat thumb that can 13 00:00:45,333 --> 00:00:46,293 Speaker 3: actually work. Right. 14 00:00:47,133 --> 00:00:50,053 Speaker 4: Yeah, well, this is quite interesting because you often see budgeting, 15 00:00:50,453 --> 00:00:54,573 Speaker 4: budgeting advice or TikTok Instagram or even or news talk 16 00:00:54,653 --> 00:00:57,533 Speaker 4: said B and you sometimes want to do these tips 17 00:00:57,573 --> 00:01:00,413 Speaker 4: really work, and so that's why I started digging through 18 00:01:00,613 --> 00:01:03,773 Speaker 4: the university papers to find these kind of science based 19 00:01:04,093 --> 00:01:07,133 Speaker 4: savings tips. And when it comes to bed accounting, you 20 00:01:07,253 --> 00:01:10,373 Speaker 4: often hear of these rules of thumb, like you should 21 00:01:10,373 --> 00:01:14,013 Speaker 4: spend fifty percent of your money on your needs, thirty 22 00:01:14,053 --> 00:01:16,893 Speaker 4: percent of your money on wants, and twenty percent on savings. 23 00:01:16,893 --> 00:01:19,933 Speaker 4: And there's a really good book by the Barefoot Investor 24 00:01:19,973 --> 00:01:22,773 Speaker 4: out of Australia who's got some similar kind of buckets 25 00:01:22,773 --> 00:01:24,973 Speaker 4: about how you should split up your money. Now, the 26 00:01:25,053 --> 00:01:28,453 Speaker 4: question I had was does this really work? It Actually 27 00:01:28,693 --> 00:01:31,333 Speaker 4: the ounces yes. There was some research out of the 28 00:01:31,453 --> 00:01:36,533 Speaker 4: University of Chicago and economists called Richard Salor, who's absolute genius, 29 00:01:36,733 --> 00:01:39,093 Speaker 4: and he found that if you follow some of these 30 00:01:39,093 --> 00:01:43,413 Speaker 4: simple mental rules of thumb, or what he calls mental accounting, 31 00:01:43,693 --> 00:01:46,213 Speaker 4: you do end up saving more. But to do it 32 00:01:46,253 --> 00:01:48,573 Speaker 4: the right way, what we've got to do is we've 33 00:01:48,573 --> 00:01:51,853 Speaker 4: got to split up our money into different accounts. So 34 00:01:51,933 --> 00:01:54,893 Speaker 4: back in your oldie days, when you got paid at 35 00:01:54,933 --> 00:01:57,853 Speaker 4: a little brown paper envelope, people would split up their 36 00:01:57,933 --> 00:02:00,773 Speaker 4: money into those different envelopes and you'd have your food 37 00:02:00,893 --> 00:02:04,293 Speaker 4: envelope and you, yeah, whatever it was that you're spending 38 00:02:04,293 --> 00:02:06,293 Speaker 4: money on, you'd have different envelopes. And it turns out 39 00:02:06,453 --> 00:02:09,173 Speaker 4: that actually works that in the modern day, if you 40 00:02:09,213 --> 00:02:11,733 Speaker 4: get your pay it and you have some automatic payments 41 00:02:11,773 --> 00:02:15,293 Speaker 4: go out into whether it's your needs account to your 42 00:02:15,293 --> 00:02:18,733 Speaker 4: wants bank account and your saving spank account, that actually works. 43 00:02:18,773 --> 00:02:22,173 Speaker 4: People end up saving ten percent more compared to if 44 00:02:22,213 --> 00:02:24,773 Speaker 4: you just had all your money in the wash. 45 00:02:24,893 --> 00:02:27,973 Speaker 3: Yeah, yeah, I see. That's so interesting. It's funny how 46 00:02:28,013 --> 00:02:30,533 Speaker 3: human nature works like that. But I've got a lot 47 00:02:30,533 --> 00:02:33,013 Speaker 3: of friends who budget that way and they say the 48 00:02:33,013 --> 00:02:35,813 Speaker 3: same thing. That really does if you have those different pots, 49 00:02:35,853 --> 00:02:38,693 Speaker 3: if you like, it does make a big difference. Another one, 50 00:02:39,013 --> 00:02:42,493 Speaker 3: another tip back by science that is kind of like 51 00:02:42,573 --> 00:02:44,613 Speaker 3: running a marathon in a way, is that instead of 52 00:02:44,653 --> 00:02:47,093 Speaker 3: focusing on big goals, you've got to break things down 53 00:02:47,133 --> 00:02:48,373 Speaker 3: into bite sized chunks. 54 00:02:49,053 --> 00:02:49,293 Speaker 2: Yeah. 55 00:02:49,293 --> 00:02:52,013 Speaker 4: This is fascinating because often people say, right, set a 56 00:02:52,053 --> 00:02:54,693 Speaker 4: big savings goal, get yourself excited. You know, I want 57 00:02:54,693 --> 00:02:56,533 Speaker 4: to save five grad this year, or I want to 58 00:02:56,573 --> 00:02:59,613 Speaker 4: save ten grad this year. Well, the research out of 59 00:02:59,933 --> 00:03:03,573 Speaker 4: a university in Texas, Rice University, says that's actually the 60 00:03:03,573 --> 00:03:06,093 Speaker 4: wrong way to go about it. And the reason it is, 61 00:03:06,093 --> 00:03:07,733 Speaker 4: if you've set a big goal and say I would 62 00:03:07,773 --> 00:03:10,773 Speaker 4: to save five grand this year, there may be this 63 00:03:10,853 --> 00:03:13,133 Speaker 4: week or I won't save quite as much because I'll 64 00:03:13,133 --> 00:03:16,493 Speaker 4: make up for it later. Yeah, but what actually works 65 00:03:16,573 --> 00:03:18,773 Speaker 4: is if you just say, okay, five grand in a 66 00:03:18,853 --> 00:03:21,693 Speaker 4: year is about one hundred bucks a week, So I 67 00:03:21,733 --> 00:03:24,173 Speaker 4: have just got to focus on saving one hundred bucks 68 00:03:24,213 --> 00:03:26,413 Speaker 4: a week. I'm not going to focus on that big goal. 69 00:03:26,773 --> 00:03:28,693 Speaker 4: It's just what do I need to do this week, 70 00:03:28,733 --> 00:03:32,693 Speaker 4: this fortnight, this month, depending on when you actually get paid, 71 00:03:32,933 --> 00:03:36,093 Speaker 4: and using something like a habit tracker, whether it be 72 00:03:36,293 --> 00:03:38,373 Speaker 4: I mean, there are great ones out there for your iPhone, 73 00:03:38,373 --> 00:03:42,253 Speaker 4: whether it's progress or habitafi Strides is another one. If 74 00:03:42,293 --> 00:03:44,933 Speaker 4: you just say, Okay, I need to set one hundred 75 00:03:44,933 --> 00:03:47,413 Speaker 4: dollars aside for the next five weeks and see how 76 00:03:47,453 --> 00:03:50,653 Speaker 4: I go. That works. People end up saving eighty two 77 00:03:50,693 --> 00:03:52,693 Speaker 4: percent more when they do it that way. 78 00:03:52,893 --> 00:03:56,293 Speaker 3: Wow, that's amazing. Okay, eighty two percent more is huge. 79 00:03:56,693 --> 00:03:59,853 Speaker 3: There's also the save more Tomorrow approach, which is like 80 00:03:59,893 --> 00:04:01,733 Speaker 3: a behavioral economics track. 81 00:04:02,733 --> 00:04:04,973 Speaker 4: Yeah. Now this is an interesting one which might seem 82 00:04:05,013 --> 00:04:07,373 Speaker 4: counter to the one we just to talked about. But 83 00:04:07,453 --> 00:04:09,853 Speaker 4: the idea here is when you start out at a job, 84 00:04:09,893 --> 00:04:12,653 Speaker 4: you're not earning much, so it's really hard to save 85 00:04:12,693 --> 00:04:15,693 Speaker 4: because you're income slow. And what these guys again it 86 00:04:15,733 --> 00:04:17,653 Speaker 4: was out of the University of Chicago. What they did 87 00:04:17,733 --> 00:04:19,733 Speaker 4: is they went to a bunch of employers and they said, 88 00:04:19,733 --> 00:04:22,733 Speaker 4: next time you give any of your employees a pay rise, 89 00:04:23,013 --> 00:04:25,293 Speaker 4: offer them the chance to put half of that pay 90 00:04:25,373 --> 00:04:28,413 Speaker 4: rise into savings, and every single time they get a 91 00:04:28,453 --> 00:04:30,293 Speaker 4: pay rise, say do you want to put half of 92 00:04:30,333 --> 00:04:33,533 Speaker 4: that regularly into savings? Well, blow me down. Four out 93 00:04:33,533 --> 00:04:37,413 Speaker 4: of five employees when offered this, sign up for it. 94 00:04:37,653 --> 00:04:40,013 Speaker 4: At eighty percent of the people who sign up and 95 00:04:40,053 --> 00:04:43,253 Speaker 4: take this approach stick with it for four years. The 96 00:04:43,373 --> 00:04:46,933 Speaker 4: amazing thing is this actually works on average. In their study, 97 00:04:47,213 --> 00:04:50,013 Speaker 4: people went from saving about four percent of their income 98 00:04:50,253 --> 00:04:54,053 Speaker 4: to fourteen percent of their income over that four year period, 99 00:04:54,133 --> 00:04:56,253 Speaker 4: so that one again definitely works. 100 00:04:56,413 --> 00:04:58,493 Speaker 3: Yeah, that's amazing. Okay, cool, Thank you so much. 101 00:04:58,653 --> 00:04:58,733 Speaker 1: Ed. 102 00:04:58,733 --> 00:05:00,253 Speaker 3: We're going to put all of those tips up on 103 00:05:00,293 --> 00:05:03,253 Speaker 3: the News Talk Z'B website. Our money guy there Ed 104 00:05:03,333 --> 00:05:05,853 Speaker 3: McKnight from Op's partners for. 105 00:05:05,893 --> 00:05:08,973 Speaker 1: More on Saturday Morning with Jack Tame. Listen live to 106 00:05:09,053 --> 00:05:12,093 Speaker 1: News Talks at B from nine am Saturday, or follow 107 00:05:12,133 --> 00:05:13,693 Speaker 1: the podcast on iHeartRadio.