Saving for retirement in the
new economic reality will be hard. The new “gig economy” consists of
freelancers, part-time workers, independent contractors, and the self-employed.
It’s estimated that more than 40 percent of workers are no longer salaried
employees and that this percentage will continue to grow.
These people will be solely
responsible for their own retirement and financial well-being, if we don’t
provide easy digital tools for savings, we could be looking at a generation of
workers struggling to achieve financial security in retirement.
Apple Pay and Amazon’s
one-click buying are examples of digital tools that have made it easier than
ever to spend money. With tools like Robo-savings apps, the goal is to make
saving money just as easy.
Another example is to provide
just in time feedback to your mobile device. Apps that track your investment
performance and spending habits can have a huge impact on your behaviour. Users
of a U.S.-based app called Personal Capital decreased their spending by 15.7
percent. Most of that decrease came from discretionary spending, with users
spending less on categories like dining out.
Results from government
surveys support this behaviour. The majority of consumers with access to their
financial information on mobile phones check their balances before making large
purchases, and of those who check, 50 percent decide not to buy an item because
of the feedback.
When I was teaching, one course I taught was financial literacy. A major issue with teaching financial literacy
in school is that students can’t apply the concepts they learn until many
months or years later. One study found that, like other education, financial
education decays over time; even large interventions with many hours of
instruction have negligible effects on behaviour 20 months or more from the
time of intervention.
Using technology and apps that
provide just-in-time financial information perhaps can solve this timing issue,
providing people with crucial information when they need it the most.
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