Anyone who has experienced the thrill of a quick online purchase knows that impulse buys can feel good. There’s a scientific reason for this: our brains are hardwired for instant pleasure. This response dates back to prehistoric times, when life was about surviving the here and now rather than planning for the future.
Overcoming a hurdle that is mostly neurological can be challenging, and no amount of chastising yourself for not saving seems to help. However, research suggests you can actually “hack” your brain to foster healthier financial habits and become a more mindful spender. With these simple tricks, you could be well on your way to spending and saving every dollar with intention.
1. Envision the future
Though it might sound out there, science suggests that you may be able to improve your savings decisions by downloading digital apps like Aging Booth and FaceAppOpens in a new window.. In fact, people who have digitally aged images of themselves are much more likely to save for their retirement, according to a Stanford University study Opens in a new window.. When you bring the future into the present, the concept of tomorrow becomes more clear, and it becomes easier for your brain to justify saving for it.
2. Appreciate what you already have
Take stock of what you have in your life. Do you have brand new clothes hanging in the back of your closet? Do you really need that blank notebook or that cool-looking bottle of balsamic vinegar?
One obstacle to building wealth is mindless spending for the sake of immediate pleasure. Realizing and appreciating what you already own will help train your brain to think more mindfully about future transactions.
3. Delete and unsubscribe
You can also train your brain to spend less impulsively by cutting out opportunities for automatic purchases. Start by unsubscribing from all the newsletters from your favourite online retailers, suggests money coach Judith Cane Opens in a new window.. Then, sign on to the accounts where you’ve previously entered your credit card and shipping information and delete.
Next time you feel compelled by an online sale, checking out will take more time to re-enter all your details. That may be enough time for your brain to decide whether you really need that item. “Let’s call it shopping yoga,” says Cane. “Take a breather, give yourself some time and space, and take a minute to think about it. Don’t click ‘buy’ right away. Leave it in the cart for a while.”
4. Only use money you’ve already got in the bank
It’s easy to use the contactless feature on your credit card, but using cash or a debit card to pay for items can sharpen your brain’s decision-making abilities. That’s because you’re giving yourself more time to consider whether the purchase is the best use of your money. You’re also inclined to spend significantly less than you would if you were using a credit card, according to a MIT study of Opens in a new window.purchasing behaviourOpens in a new window..
Cane suggests distributing the amount of cash you want to spend on expenses such as groceries, entertainment and discretionary items within a 2-week time frame. Once the money is gone, it’s gone — and you can’t spend any more.
5. Create separate savings accounts for separate expenses
Even if you can only save a dollar a day, watching your account balance steadily grow can light up your brain’s reward centre, according to astudy by neuroscientists in the U.K. Opens in a new window.. This in turn could give you the confidence to develop healthier financial habits.
Creating separate accounts for separate expenses ensures the money is already there when you need it. It makes it easier for you to stick to a budget, too. If you can automate the transfer of funds from your paycheque directly into these accounts, it could also make it less painful for your brain to get used to the idea of spending-related restrictions.
6. Call your friends more often
Next time you’re tempted to go on a shopping spree or binge on junk food after a rough week, call a friend instead. This trains your brain to rely on new, healthier coping mechanisms such as spending quality time with the ones you love instead of seeking distractions through shopping.
Building and embracing healthy savings habits are key to changing your brain’s behaviour. Once you train your brain to keep a regular routine, you’ll be better able to commit to it, while building a healthy financial future.
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