By Robert Stitt
A failure to save might not be entirely your fault. It could be in your DNA. “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,” suggests Conscious Finance.
Ted Klontz of Klontz Consulting Group is a financial behavior expert. He agrees with the Conscious Finance assessment and blames our poor choices on “reptilian brains.” He notes, “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…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.”
This is bad news for most of us. In fact, a recent Pew Research report indicates that “more than half of American households would be able to take care of themselves for less than one month if they had to support themselves.” We need to be able to save. Is there anything to deliver us from our reptilian brains? Klontz says, no. “The reptilian brain is nearly impossible to change. The best most of us can do is manage it.”
So, what are some tips for managing the reptilian brain and building our saving?
- Make saving automatic. Take the brain out of the equation. When the money comes out of the check before you even see it, then it is easy to forget it is even there. When you are saving long-term, such as making contributions to retirement accounts, use the same practice.
- Trick your brain by labeling your accounts with safe names like “Europe” or “Vacation Home”. He suggests even putting a picture on the folder to help your brain associate good things with savings.
- Visualize your retirement. Try to see yourself as a retired person (Merrill Edge Face Retirement app actually helps you do that) so you can make savings more of a concrete reality instead of an abstract concept. “A sobering reminder to your brain that there is someone out there who has to create financial security for you in a few years—you.”
While your reptilian brain may want you to spend your entire check on a whim, with a bit of self-discipline, a few automatic deductions, and some brain tricks, you can financially evolve.