A lot of people think saving is uncool. But not having money is also annoying. Why do some people manage it well and others do not? Because some people have a ‘savings brain’. If you understand what that means, you will have more money in the long run. Let me explain.
To understand this, you have to learn to understand how what we think and what we feel are connected – for example, when we buy something. Why is it easier for some people not to buy something and to put something aside instead? In other words, why do people spend money all the time without thinking?
It is a question of present preference. You say to yourself ‘I want this now’ as opposed to ‘I’d rather leave it, but I’ll get something much better later’. A chocolate bar in your hand is better than solar panels on your roof – that is the standard configuration of a human being who is basically just an animal who has learned to control his urges. In the past, when people hunted and gathered, saving was not an option. Why not eat the good berries right away? So they go bad while you starve? The parts of the brain that prevent us from consuming now developed very late.
The reward and control regions of our brain compete with each other. You reward yourself with something (e.g. a chocolate bar, a playstation, a concert) and your body rewards you with dopamine, our so-called happiness hormone. It feels good. Unless the control centre has managed to suppress the impulse to buy. Then it doesn’t feel so good. And experience shows that it doesn’t help at all to cheerfully point out to others that we’ll feel much better later on.
Imagine this: a little man is sitting on a big elephant. The little man thinks he knows the elephant very well and wants to show it the way, but often the elephant just tramples where it wants to go. The elephant represents our feelings, the little man represents reason. The elephant is very strong. But the better the little man knows the elephant’s preferences, the better he can achieve his goal. It probably works best if the elephant believes it wants the same thing as the man.
Perspective is actually crucial: what is known as episodic future thinking. Often we don’t think that far into the future. But as soon as we do, including financially, it is easier for us to put aside our preference for the present. You haven’t just gone without a chocolate bar, you’ve made it possible to have some of the solar panels that will one day be used to charge your electric car. You can already see it in front of you. What a good feeling, the elephant grumbles.
Of course, this is only the first step. The second is impulse control, which means that anyone who really wants an electric car in the future will have to change their behaviour. It’s hard, but it can be done.
Indulge yourself with some nothing
The brain hates choices and loves habits. Amazon was the first to understand this and introduced the one-click button. Once you have saved your payment method, all you have to do is click once when you want something. It may not be delivered until the next day, and if you decide the next day that the purchase is not practical, you have to find the time to take a few extra steps to possibly return it.
A one-stop button would be ideal. Before you pay, take a minute to imagine your life with that new hair clipper, that new grain mill, etc. – in ten days, ten months, ten years. Would there even be room for it, theoretically? You can take this mental button from a purely visual to a practical one by creating your own and sticking it on your credit card, laptop or smartphone to remind yourself to stop and think for a moment.
Or another mini-hack: Google to see if you can find a voucher that will get you the mill for 15% less. If you’ve spent 15 minutes on dodgy sites with strange names and forgotten what you were doing, maybe the grain mill wasn’t that important after all. Even better, the better we are at following rules, the more likely we are to change things. Once you have internalised this, the rule will work.
It would be best to share all of this with someone close to you, such as your best friend, a close family member, or your bank advisor, who can congratulate you on your progress. If you start saving now, a little digital attention with a picture of your favorite beach and a “You’re almost there. Your vacation is 82% funded.’ can be sent. This creates new reward mechanisms and dopamine rushes – and your brain is happy.