In this article, titled “How to Train Your Brain to save more money, According to Psychologists,” the author discusses the challenges of saving money in today’s society. With many Americans living paycheck-to-paycheck and struggling to cover unexpected expenses, the ability to save money has become increasingly elusive. The article highlights the psychological factors that contribute to impulsive spending and provides strategies to retrain the brain to save instead. By focusing on techniques such as paying with cash, automating savings, and limiting exposure to tempting luxury items, individuals can develop healthier financial habits and experience the benefits of a secure financial cushion.
How to Train Your Brain to Save More Money, According to Psychologists
saving money is a challenging task for many individuals. With the increasing gap between the wealthy and the working class, the ability to save money has become more elusive than ever. Many Americans are living paycheck to paycheck, with little to no financial cushion to rely on in times of unexpected expenses. However, psychologists have discovered strategies that can help individuals train their brains to save more money and create a more secure financial future.
Pay with cash
One effective strategy to train your brain to save more money is to pay with cash instead of credit cards. When you pay with cash, you have a tangible representation of the money leaving your wallet, which can make you more conscious of your spending decisions. Psychologist Dr. Moira Somers suggests that using cash for discretionary items, such as clothing, food, and entertainment, can reduce spending by as much as 20-28 percent. The act of physically handing over cash can create a moment of pause, allowing you to reconsider whether you truly need the item you’re about to purchase.
Automate your savings
Another effective way to train your brain to save more money is to automate your savings. By setting up automatic transfers from your checking account to a savings or retirement account, you ensure that a portion of your income is consistently being saved. Dr. Somers recommends allocating a percentage of your income to be put into a savings vehicle, such as a 401(k), Roth IRA, or a separate periodic savings account for specific expenses like holidays or annual insurance payments. Automating your savings takes the mental strain out of saving and makes it a regular habit.
Do an annual money cleanse
Taking some time each year to review your expenses and trim unnecessary costs can significantly impact your saving ability. Colin F. Camerer, a professor of Behavioral Economics at Caltech, suggests conducting an annual money cleanse. During this cleanse, closely examine your credit card bills and identify any auto-debits for expenses that you no longer need or want. By eliminating these unnecessary expenses, you free up more money to save and invest. It’s important to be adaptive and make do with a little less in order to prioritize saving for the future.
Curb time spent at the mall and watching lifestyle TV
It’s no secret that exposure to extravagant lifestyles can tempt us into desiring luxury items that are beyond our means. One way to train your brain to save more money is to reduce your exposure to such lifestyles. Dr. Somers advises limiting the time spent at the mall and watching lifestyle TV shows that promote excessive spending. The longer you spend shopping, the more likely you are to make impulsive and unconscious spending decisions. By reducing your exposure to these temptations, you can avoid unnecessary spending and prioritize saving for your financial goals.
Disable 1-click ordering
Impulsive online purchases can quickly derail your saving efforts. One simple yet effective way to train your brain not to spend impulsively is to disable 1-click ordering. Behavioral economists refer to this as “friction,” which is anything that creates a barrier between you and making a purchase. By adding a few extra seconds of thinking time between adding an item to your cart and completing the purchase, you give yourself the opportunity to second guess your decision and potentially avoid unnecessary spending. Disable 1-click ordering on your favorite online platforms to create that necessary friction and safeguard your savings.
Understand that it’s good for you
Perhaps the most essential step in training your brain to save more money is to understand and internalize the benefits of having financial security. Dr. Somers emphasizes that having savings decreases stress, increases confidence, and provides the freedom to make important life choices. With savings, you have the power to change your life and the lives of those you care about. It can enable you to travel, invest, pursue education, and make career changes. Having a financial cushion also ensures access to better healthcare and a safer living environment. By recognizing these benefits, you can shift your mindset and prioritize saving for a more secure and fulfilling future.
In conclusion, training your brain to save more money is a continuous process that requires conscious effort and commitment. By paying with cash, automating savings, conducting an annual money cleanse, curbing exposure to temptation, disabling impulsive purchasing options, and understanding the benefits of financial security, you can rewire your brain to prioritize saving and create a more stable financial future. Saving money is not only good for your wallet but also for your mental health and overall well-being. Start implementing these strategies today and watch your savings grow.
