Psychology of Pandemic Savings
During Corona, savings in the Netherlands have increased explosively. From 21 billion in 2019 to 42 billion in 2020! In addition to a practical one, this also has a psychological aspect.
Hoarding money is a natural response when you experience a threat of financial insecurity or uncertainty. Debts were not paid off although the interest on debt is higher than the interest on savings
Savings are not being spent en masse now. In a relatively short time we had to change because of the pandemic and now we are expected to change again, after all, the economy does too.
The economy may be able to recover quickly, but that does not apply to our brain. Our brain doesn’t like change. In financial psychology, this adherence to a familiar situation is called the ‘Status Quo Bias’; Even though our behavior towards money is not logical (anymore), we still hold on to it because it gives a sense of control.
‘Loss Aversion’ also plays a part. A solid savings account rings our inner alarm system. We have a natural aversion to loss, which is larger than our desire to gain profit. This aversion is based on fear
If you have just amassed ten or twenty thousand euros, experiencing it shrink is extremely painful. We try to avoid that pain by leaving the money in our savings account. Even if the pain is sometimes unrealistic and you would, for example, invest that amount better. Or enjoy life a little bit.
#economy #money #psychology #change #corona
Read the Dutch article on the MAX broadcast Network HIER