Financial Literacy

How Language Dictates Your Savings Habits

Editorial Note: This article originally appeared in The Oxford Insight. It received such a big response from Members that we wanted to share it with you today.

We think you may learn something.

I live in the future.

I’m constantly focused on tomorrow or six months from now… or even further out. Today? I’m not worried about it. I focused on today yesterday.

So the present is largely meaningless to me.

This is why I’m not fazed by volatility or sell-offs.

They are opportunities to me.

I’m thinking ahead. So shares of companies with good fundamentals that fall 8%, 9%, 10% or more during a two-day downturn are gifts. Because those shares will be higher a few months from now… maybe even a few days from now.

The future has more weight than the present when it comes to investing.

And studies have shown that this type of thinking results in better financial decisions.

But what if there’s more to it than that?

What if the language you speak – and how it relates to the future – can make you a better investor and saver?

This is an idea that has emerged over the last several years. And because of my love for behavioral economics, I’ve found it intriguing.

In the 1930s, linguists Edward Sapir and Benjamin Whorf developed the theory of linguistic relativity. The idea was centered on how the structure of the language we use affects the way we see the world.

For example, a person who grew up speaking, reading and writing English will think differently about certain concepts than someone who grew up speaking, reading and writing Mandarin.

And it’s not cultural; it has to do with the way a language is structured.

Recently, behavioral economist Keith Chen revisited the idea of linguistic relativity. He has looked at how it relates to our ability to save and plan.

The hypothesis is that if there is no clear grammatical distinction between the present and the future in a language, then speakers of that language view the future and the present the same way.

To illustrate what I mean, in English, we say, “I will go to the play.” English is a strong-future language – we have a distinction between present and future events. English forces us to divide time into tenses.

But in Mandarin, you say, “I go to the play.” It’s a futureless language. There’s no distinction between the present and the future. Finnish is similar in that you essentially say, “Today be cold,” as well as “Tomorrow be cold.” The same verb tense is used whether you’re talking about the present or the future. That makes Mandarin and Finnish weak-future languages.

Interestingly, after studying 76 developed and developing countries, Chen found that speakers of weak-future languages were better at preparing for the future…


language savings habits

On average, by blurring the lines between present and future, countries that speak strong-future languages save 4.75% less than their weak-future counterparts.

And those results accounted for a variety of economic factors. Chen also compared households with the same income, religious beliefs, etc., so the only difference was language.

His findings were that speakers of strong-future languages – like English – had 39% less assets for retirement. They were also less likely to save money in general, as well as more likely to adopt unhealthy habits.

Even in a country like Switzerland, where three languages are spoken, those who spoke a strong-future language saved only 36% as often as those who didn’t.

In the chart, you can see the United Kingdom and the United States are at the wrong end of the savings spectrum, along with most of the other strong-future language speaking countries. In contrast, Luxembourg, Norway, Switzerland, Japan, Finland and the rest of the weak-future language speaking countries had higher savings rates compared to their GDPs.

In those countries, Chen found that people gave the future the same weight as the present. And, in turn, they planned accordingly.

Now, behavioral economics is a somewhat controversial field in and of itself. And Chen’s work has plenty of skeptics.

But there is a point to be made here… Don’t say, “I am going to start saving for my retirement,” or “I am going to invest during the next sell-off.” I still have friends and family members who use those grammatical crutches or excuses, thinking that the future is some far-off place that they’ll get to eventually.

The future should be given more importance than today… especially in terms of financial decisions and investing.

Today, you should have already prepared for tomorrow. That means we should be focused on the future now.

Good investing,



Matthew’s expertise ranges from classic industries such as oil and mining to cutting-edge markets like small cap tech, cannabis, 3D printing and cloud computing. With almost two decades of financial experience under his belt, Matthew’s knack for finding market trends never fails to surprise us, which is why we keep a close eye on his free e-letter, Profit Trends.

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