How Language May Affect the Amount of Money You Save

A new theory in behavioral economics makes a strong case for why it is so difficult for consumers to save in the United States. The theory, proposed by Dr. Keith Chen, basically argues that citizens in countries that use languages with strong future-time references save less, on average, than citizens in countries that use languages with weak future-time references.

Citizens in the United States predominantly speak English, a language with strong references for events occurring in the past, present, and future. Thus, U.S. citizens save less, in terms of the individual savings rate, than citizens of China, for example (as Mandarin has much weaker references to future-time).

To explain the connection, Dr. Chen points out that because Mandarin does not provide a clear distinction between present and future (e.g., “I saved today; I saved tomorrow”), Chinese citizens save with the perception that the future is much closer to present reality than in those countries with languages that strongly demarcate between tenses. This could mean that for (predominantly) English-speaking consumers, the use of the future tense is a setback for personal savings because it creates too much distance from present reality.

While Dr. Chen’s language theory is still a work in progress, it does provide at least one explanation as to why a large swath of U.S. consumers feel financially unprepared for their retirement years. The statement, “I am saving in the future,” doesn’t make sense in English and must be said another way: “I will be saving in the future.” Without taking the theory too far, suffice it to say that the time between when you say you will save, and when you actually save, usually ends up being longer than you had initially planned. And delaying your savings initiatives reduces the time that compounding interest has to work in your favor. This unfortunate proclivity is why most personal finance experts advise consumers to start saving some amount of money as soon as possible, even if it is a small amount each month.

So as you look ahead to the future, you would do well to take a lesson from the small print on the bottom of the rearview mirror and remind yourself that objectives in your financial future are actually closer than they appear. Though it would be farfetched to go learn Mandarin simply in order to change your savings mentality, acknowledging the threat to savings posed by the distance created by the future tense is a good way to help create the urgency needed to prevent financial stress down the road.

Patrick Russo writes about banking and personal finance strategy for, a site featuring credit union and bank deals, rates, and customer reviews for over 7,500 federally insured institutions.