By Kristina Peterson Of DOW JONES NEWSWIRES

WASHINGTON -(Dow Jones)- Cellphone text messages: bad 4 grammar, good for savings?

A new study by a group of economists looking at why people save money found that simply sending out cellphone reminders increased savings balances by 6%.

The study challenges the idea that people simply don't have enough self-control to save. Instead, the problem may be they just aren't paying attention, said Dartmouth University economics professor Jonathan Zinman, one of the study's four authors.

"Savings isn't at the top of their mind," said Zinman. "Basically all we did was remind them."

While a 6% increase may not send bank account balances soaring, nudging up the savings rate has been historically difficult--until the latest recession.

Classroom financial education has not proven particularly effective, said Jennifer Tescher, director of the Center for Financial Services Innovation. But online and cell phone platforms could deliver messages with greater impact.

"This is an idea we think has tremendous potential," she said.

The economists conducted their study in three locations in the developing world, but said they were confident the results would translate to the U.S.

In three cases conducted in the Philippines, Peru and Bolivia, the economists teamed up with local banks to send reminders to people randomly selected from those who had recently opened a savings account.

The banks sent several different types of messages, including letters in Peru and text messages in Bolivia and the Philippines. Some used negative language to stress the consequences of not saving money.

"If you don't frequently deposit into the Gihandom Savings account, your dream will not come true," warned one message in the Philippines.

While positive or negative language did not have a significant effect on the savings rate, mentioning a customer's specific goal did. When reminders mentioned incentives offered by the bank for consistent deposits, bank savings increased by almost 16%.

"One thing that can make savings salient today is being reminded of your future goal," Zinman said.

In the U.S., where some banks let customers set up automatic deposits into their savings accounts, the reminders might be used to urge people to set up such default savings programs, Dean Karlan, report co-author and Yale University economics professor, said.

Banks stand to profit from a program that increases account balances. While sending letters can be expensive, text messages cost relatively little.

In the U.S., the recession has already delivered the biggest reminder that savings are crucial to weathering the economy, according to Carol Kaplan, spokeswoman for the American Bankers Association.

"People are spending less and saving more and they haven't needed any text messages to do that," she said.

But the study's authors said their focus on attention has far-reaching implications in areas like dieting or quitting smoking and could explain some irrational behavior like overspending on extended warranties.

One remaining question is how saving more affects a person's overall finances, Zinman said, and the group plans to research further issues like how the timing of the messages may be a factor.

"Getting a text message in the morning reminding you to eat healthy may be less powerful than one right before lunch or dinner," Karlan said.

-By Kristina Peterson, Dow Jones Newswires; 202-862-6619; kristina.peterson@dowjones.com

(END) Dow Jones Newswires

11-03-09 1159ET