The Role of Self‐Regulation, Future Orientation, and Financial Knowledge in Long‐Term Financial Decisions

Abstract

This research examines potential explanations of why consumers have difficulty making personal financial decisions that will be most beneficial in the long run. Within the decision context of retirement savings, results from an experiment suggest that self-regulatory state, future orientation, and financial knowledge can influence consumer evaluations and intentions related to retirement investments (i.e., a 401(k) plan). Findings suggest that consumers who express higher levels of future orientation are more likely to participate in a retirement plan, an effect moderated by self-regulatory state. Results also suggest that financial knowledge and orientation toward the future can interact to influence the likelihood of 401(k) plan participation. Among consumers with a basic level of financial knowledge, future-oriented consumers expressed a greater likelihood to participate in a retirement plan than less future-oriented consumers. However, in the absence of knowledge, consumers' orientation toward the future did not influence the likelihood of 401(k) plan participation.

Individual Wealth Accumulation: Why Does Dining Together as a Family Matter?

“…The high level of self-regulation required to eat together regularly may strengthen the selfregulatory muscle thus providing the self-control necessary to save regularly and accumulate greater wealth across time. Greater self-regulatory resources also appeared to influence investment decisions in another study (Howlett, Kees, and Kemp, 2008). As previously mentioned, individuals in the current study who had greater self-regulation resources preferred diversifying their investments Hurst, Luoh, and Stafford (1998) found in their study that diversification of portfolio leads to greater wealth accumulation for households.…”

“…Third, similar to a muscle that increases in strength and stamina through regular exercise, selfregulatory capacity increases when practiced and can be developed through conscious and routine use, thus exercise of self-regulation in one area can lead to greater self-regulation in seemingly unrelated areas. Howlett, Kees, and Kemp (2008) found that individuals' intentions to enroll in a 401(k) plan were lower when participants were in a depleted self-regulatory state resulting from a mentally intensive reading exercise. Furthermore, attitudes toward various investments were also affected by the depletion of self-regulatory resources.…”

What drives retirement income worries in Europe? A multilevel analysis

“…Furthermore, it has been suggested that having many children should be negatively predictive of saving for old age (Galasso et al 2008), because children are themselves considered to be a source of support. Future time perspective has been shown to be positively related to retirement saving practices Howlett et al 2008;Jacobs-Lawson and Hershey 2005). Finally, as saving is typically the end result of financial planning, it would follow that those who generally enjoy planning (i.e., positive planning affect), might be more likely to save.…”

The role and relevance of domain knowledge, perceptions of planning importance, and risk tolerance in predicting savings intentions

“…And, Bhandari and Deaves (2008) find that younger, more-educated, higher-earning advice-receiving males with a planner mindset hold more equity, and an understanding of asset allocation accentuates the impact of the key factors age, income and a planner mindset. Finally, Howlett, Kees and Kemp (2008) find that selfregulatory state, future orientation, and financial knowledge can influence consumer evaluations and intentions related to retirement fund investments. Findings suggest that consumers who express higher levels of future orientation are more likely to participate in a retirement plan, an effect moderated by self-regulatory state.…”

“…Moreover, the field may benefit from future research designed to discriminate differential construct and predictive validity associated with constructs such as perceived planning importance as employed here, compared to other kindred constructs such as future time perspective (Jacobs-Lawson et al, 2004), future orientation (Howlett et al, 2008), propensity to plan (Deaves et al, 2007), and planner mindset (Bhandari & Deaves, 2008).…”