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How Financially Responsible Are You?

The answer may surprise you.

Key points

  • People want to save but they often spend instead.
  • This occurs in part because people believe they are more financially responsible than they actually are.
  • This positive illusion of financial responsibility can lead to under-saving and otherwise poor financial decisions.
  • Keeping yourself honest, by tracking, budgeting, and holding yourself accountable may help.

Saving more money is a top New Year’s Resolution. And for good reason, it’s an excellent way to boost your well-being.

Yet, although most people want to save, they spend instead.

To see how you’re faring, answer the following five questions using this scale:

Once/12 months+ Once 9 months+ Once/6 months+ Once/3 months+ Once/month+

1. How often do you choose to eat at a more expensive restaurant instead of a cheaper one (takeaway, delivery, or dine in)?

2. How often do you buy something at full price instead of waiting for it to go on sale?

3. How often do you buy something you want instead of foregoing the purchase?

4. How often do you purchase a more expensive brand, instead of a cheaper one (e.g., a store brand)?

5. How often do you go out to eat instead of cooking at home?

The Results

If you’re like most people, you answered “once a month or more” to most or perhaps all of the questions. There’s nothing inherently wrong with that.

But for many people, answering these questions feels like a dip in the Great Lakes on New Year’s Day. It brings clarity, even if the process of getting there is really unpleasant.

When my colleagues and I posed the above questions to people in the US, UK, Canada, and Uganda, we found that answering these questions burst people’s bubbles. Before the study, people believed they were financially responsible, but their answers gave them the realization that they’re falling short of their ideal.

The Gap: Positive Illusions of Financial Responsibility

This gap, between people’s beliefs and their reality, is real. According to one estimate, 76 percent of Americans are living pay-check to pay-check. If they needed to come up with $400 today, they wouldn’t be able to pull it from their bank account. And yet, at the same time, Americans are feeling better about their finances than ever before. What gives?

In a paper published last year in the Journal of Marketing’s special issue, Better Marketing for a Better World, my co-authors and I shed light on this gap and how it can be fixed.

The root of the issue is that people want to see themselves in a positive light. When people look in the mirror, they see an overly flattering version of themselves. (If you’ve ever googled positive illusions, you’ll know that even kittens see themselves as lions.)

Finances are no exception. In many societies, being good at managing your money is seen as a virtuous, desirable characteristic. But finances are stressful, and stress can cause people to become even more likely to cultivate positive illusions. And so, to feel good about themselves, people come to believe they are more financially responsible than their peers, which is statistically impossible.

Most people wear rose-colored glasses when it comes to how they manage their finances, particularly during times of stress.

While some positive illusions can be good for your psychological health, this is not one of them. Our research shows that believing that you’re more financially responsible than you actually are leads you to save less than you otherwise would (and perhaps should). If you keep yourself in the dark, you may not see the red.

In fact, a study found that people engage in financially irresponsible behaviors, taking on high-interest debt instead of dipping into their savings, to keep believing that they are financially responsible.

Keeping It Real

What can people do? When my co-authors and I popped people’s positive illusion by asking them the opening questions of this post, they began saving more. For example, in Uganda, chronically poor coffee growers saved more than their peers over a span of two weeks when they had answered the opening questions (as compared to when they did not).

While most people don’t have a financial survey delivered to their inbox every day (though this could be handy), here are some suggestions for keeping it real:

  • Keep yourself honest by budgeting and tracking your finances: It can be psychologically unpleasant to budget and track your finances, but the short-term pain can lead to long-term well-being by helping you to save and avoid costly financial decisions. The good news is that this is easier than ever with many apps allowing you to track and manage your finances (here are the six best budgeting apps of 2022).
  • Prioritize your financial health, not your personal feelings: Instead of taking on high-interest debt to preserve feelings of financial responsibility, dip into your savings. Again, short-term pain for long-term gain.
  • Make yourself accountable: Make your savings goal public, through an app, or even with a savings buddy. Track your progress. Not only will you be more likely to reach your savings goal, but you’ll also feel great about your win.

Having a financial buffer by saving money can substantially improve day-to-day well-being. Psychological biases, in the form of positive illusions, may make this endeavor even more difficult than it already is. But being aware of this illusion, and knowing how to combat it, can empower you to improve your financial path.


Garbinsky, Emily N., Nicole L. Mead, and Daniel Gregg. “Popping the Positive Illusion of Financial Responsibility Can Increase Personal Savings: Applications in Emerging and Western Markets.” Journal of Marketing 85, no. 3 (May 2021): 97–112.

Sussman, Abigail B., and Rourke L. O’Brien. “Knowing When to Spend: Unintended Financial Consequences of Earmarking to Encourage Savings.” Journal of Marketing Research 53, no. 5 (October 2016): 790–803.

The 6 best budgeting apps of 2022:

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