How to Reprogram Your Brain to Save Money

Moving past our natural tendency to avoid long-term planning

A study by Pew Research finds that more than half of American households would only be able to take care of themselves for less than one month if they had to support themselves.

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This is despite repeated and widely reported advice from the financial services industry for us to sock away a minimum of three months’ worth of emergency savings. Who among us hasn’t felt stress about our lack of emergency and retirement savings?

Behavioral finance experts say, however, before we start beating ourselves up, we need to take a realistic look at why it’s so hard for our brains to grasp what it means to save.

“The default operating systems of our brains are actually programmed to make poor financial decisions. This is normal. Making good financial decisions actually takes a deliberate reprogramming of your internal operating system, says Rick Kahler, CFP, president of Kahler Financial Group, and author of Conscious Finance

World renowned financial behavior expert Ted Klontz says the part of our brains called the ‘reptilian brain,’ works against our need to save.

“The reptilian brain continually scans for threats. It is waiting for death to come walking through the doorway, so it lives in anxiety. Since anything positive is not a threat, it’s oblivious to the positive. It also doesn’t understand the concept of the future, but lives only in this moment,” says Klontz.

“It lives in the perpetual now its greatest need, after the basics of food, water, shelter, etc., are to have a sense of belonging, connection, autonomy, safety/security, purpose and self-expression and money is a means to meet those needs. The people who sell us things are knowledgeable of this and use that knowledge. So, spending on things is a way that promises to meet those needs and it does, temporarily. It’s like some types of “fast food,” satiates us quickly but has a very short half-life,” he adds.

Kahler points out how this plays out in our savings habits. “The reptilian brain might have a problem making monthly contributions to a retirement account. Saving for the future isn’t a concept it even understands. Further, it sees taking money out of the checkbook as a threat because that leaves fewer resources to battle death when it comes through the doorway. Making things even worse, the reptilian brain is nearly impossible to change. The best most of us can do is manage it.”

When it comes to managing our brain’s hard wiring against saving, Klontz says the solution is to take out the ‘decision making’ aspect. “The most successful savings plans are automatic. The money comes out before it comes into our hands. That’s the science behind federal withholding tax and Social Security, both of which “save” money for us. The best way is to work around such self-defeating wiring by copying what the government knows:  Create automatic devices that save for us.