Common personal finance advice is to maintain several different accounts, a vacation account, new car fund or Christmas club, to help people save more money.
But one group of researchers has a suggestion for people trying to spend less and save more: Consolidate multiple bank accounts into one. Individuals will save more and spend less when they have a single account, according to research by Promothesh Chatterjee at the University of Kansas School of Business and fellow researchers at the University of Utah. Their findings appeared in a recent edition of the journal Organizational Behavior and Human Decision Processes.
Multiple accounts create a “vagueness” about how much money you really have, making it easier to justify expenditures you shouldn’t make, researchers found.
A single account makes it clear how much money you have in total and what you’ll have left if you spend some of it.
If you’re opposed to a single account, at least use financial software to provide a consolidated view of all your accounts in one place, the authors suggest. “This type of aggregate reporting could help reduce vagueness and enhance savings,” they wrote.
