Saving money is hard — that’s a scientific fact.
Whether it’s transferring money to a savings account or paying down debt, making smart financial moves can go against your most basic human instincts, according to experts who study how the brain reacts to money.
So we asked two neuroscientists: how do our brains help and hinder us in our financial decisions — and how can we use that knowledge to live a richer life?
Why Is it So Hard to Save Money?
We may walk upright, trade stocks in an online exchange, and pay for groceries with the swipe of a credit card, but in many ways, we’re not so different from our earliest ancestors.
“We are hardwired to prefer things that give us immediate gratification,” says Dr. Moira Somers, clinical neuropsychologist and author of Advice that Sticks: How to Give Financial Advice that People Will Follow. “It can be hard to put off something certain today — like seeing a show or buying a new game — for a future that’s a little more uncertain.”
Long-term financial planning goes against our nature, says Dr. Moran Cerf, professor of neuroscience and business at Northwestern University. “Our brains evolved in the savannah when resources were scarce,” Cerf says. “If you saw blueberries, you could eat them now or not eat them ever, because they may be gone. […] This is why we feel full about 20 minutes after our bodies are actually full; this is a brain mechanism to store more food than it needs so we can have energy and resources for tomorrow if we don’t find food.”
This translates to decision-making that may seem irrational — like blowing your paycheck on a big purchase instead of investing it — but feels right in the moment.
Compounding these mental hurdles are structural barriers in the economy, such as high unemployment, stagnant wages, and racial inequity in wealth accumulation. Meanwhile, “there is a billion-dollar advertising industry that exists to part us with our money. In a way, we are outgunned,” says Somers.
How to Use Neuroscience to Get Better With Money
Overriding these natural instincts and transforming your finances won’t happen overnight. Here are five tips from neuroscientists on how to save more money and achieve your financial goals.
1. Pay with cash
Not every transaction feels the same to us. Cerf explains that the insular cortex, which is part of your cerebral cortex, “comes to life” when we feel pain — and that includes social pain. If your friend doesn’t pass a basketball to you during a game, a partner breaks up with you, or you lose money, you feel sadness or alienation because of that part of your brain.
According to a 2007 study by neuroscientists at Stanford, MIT, and Carnegie Mellon, the insular cortex also lights up when people are asked to imagine paying for purchase with cash instead of a credit card — a phenomenon known as “the pain of paying.”
“When we pay with cash, it’s a little painful to the brain,” Somers says. “When we pay with a credit card, only the pleasure centers light up.”
Try switching to cash and seeing if you notice a positive difference in your behavior. Somers says many people notice an “auto adjustment” in spending by nature of using cash.
2. Keep a money diary
If you really want to know how your brain works, “have a neuroscientist actually scan [it] when you make decisions and tell you how much you care about emotions, how you weigh failure versus success,” Cerf says.
The easier option? Keep a detailed diary of every money decision you make for a week. “Write about your choices and as many things as you can about your environment, like who you were with, your mood, the time of day. You collect those choices for a week and at the end, you look back at the diary and rank the choices by how happy you were with them,” she says.
By tracking your actions over time, you can start to identify patterns. You may start to notice you get hangry and buy takeout when you work through lunch, for example. Or you may feel pressure to spend after you see posts from lifestyle influencers on Instagram. Identifying these impulses allows you to sort through purchases driven by true want or need, and purchases driven by insecurity.
3. When building a savings plan, start small
As tempting as they are, dramatic changes to your finances likely won’t be sustainable. “When people are in debt, one impulse is to throw everything at it,” Somers said. But forced deprivation can only last so long — if you don’t have savings when the next emergency comes up, you may be forced to take on new debt. It’s better to establish a long-term savings habit that can be adjusted up as your life changes.
4. Add and remove friction
Friction is a term used in behavioral finance to indicate speed bumps during an experience — things like manually entering your credit card number onto an online checkout page, versus having it saved. Somers says friction can be used to your advantage when it comes to reaching your financial goals. “We [can] minimize the pain of doing the things people want to do, while making it just a little harder to foil our own best intentions,” she says.
You can add friction by turning off one-click ordering and removing saved addresses and payment info. And you can remove friction by automating savings and investments from your paycheck, setting up autopay for your bills, and paying for items with cash. “The more you can make things automatic and less dependent on willpower or memory, the more likely you are to succeed,” says Somers.
5. Accept that you’ll make mistakes along the way
No one is perfect, and therefore, not all decisions will be perfect. “The human brain isn’t made for this world,” Cerf says. It’s important to give yourself some grace, understanding that our brains have not evolved as quickly as technology has. Getting on the right track financially — creating an emergency fund, for example — can drastically improve your mental health. It may just take more time and diligence to get where you want to be.
“We need to balance two considerations — the mathematical and motivational,” says Somers. “Every decision is an emotional decision at some level.”