Where there’s a will there’s a way, especially when it comes to saving. Recent scientific findings reveal that although fewer than 25 per cent of us have a genetic predisposition to stash away money for the future, we can all learn to save if we set our mind to it.
According to Dr Hersh Shefrin of Santa Clara University in California, a further 25 per cent of people will always struggle to save thanks to a part of their brain that does not respond to a hormonal stimulus which encourages strong willpower.
The good news for those with impulsive spending habits is that there are many behaviour-changing techniques and online-based tools that can be utilised to increase your saving ability.
As knowledge expands about how the brain can be retrained to create new pathways for processing information, so does the knowledge that anyone can learn how to flex their savings muscle.
It’s been found that a gene named COMT determines whether we are born spenders or savers. It turns out that those of us with a certain COMT variant are more likely to have the pleasure hormone dopamine present in the part of our brain that controls learning.
If something is pleasurable we are more likely to give it a go. So if learning is pleasurable it is easier to acquire financial knowledge then go on to save rather than become an extravagant spendthrift.
Science has also shown that your response to the different ways of increasing your natural saving habits will depend on how your brain is wired. Washington University’s Stephan Siegel has researched the spending habits of thousands of sets of twins and discovered that genetic differences accounted for about a third of the reason why individuals were more likely to save than not.
The key to financial success begins with an awareness of our unconscious behaviour.
A study involving MRI scans has also shown that different parts of the brain light up when an individual is presented with a series of prices for a product. In some study participants, a high price will activate the part of the brain that suggests purchasing is risky and, therefore, the temptation to spend is subconsciously diminished.
In other words, learning how to control the impulse to buy non-essentials could be as easy as redefining your attitude to what constitutes risky spending.
To better understand your approach to money, you could take one of the many online quizzes designed to identify your spending personality. Once you are aware of this you can begin to reassess your perception of financial risk when you go shopping.
Parents can also reinforce responsible attitudes towards money from a young age by helping their children understand financial consequences and enabling them to develop lifelong saving habits.
A simple technique that works well if you are saving for investments, children’s education or a holiday is to place a picture of the goal you have in mind on an envelope. A photo of your child on an envelope is more likely to encourage parents to put money in it.
Similarly, a picture of a holiday destination placed somewhere you look regularly can make it more compelling to save for that dream vacation.
Another savings hack is to remove temptation. If you do your banking and budgeting electronically you could use one of many online apps designed to divert a portion of your regular income to a savings account automatically.
There are even banking products that can calculate how much needs to be put away each week to reach your savings goal and transfer that amount into your nominated account.
If you would like to become better at managing money start a conversation with us today, we’ll show you how to exercise your savings brain and help you reach your personal goals.
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Steve May, Luke Styles and May Wealth Pty Ltd T/A Steve May Financial Services are Authorised Representatives / Corporate Authorised Representative of Futuro Financial Services Pty Ltd ABN 30 085 870 015, Australian Financial Services Licensee, Licence number 238478. Please refer to our website at www.stevemayfs.com.au to reference our Financial Services Guide and business/adviser profiles.
May Wealth Pty Ltd ABN 71 612 234 518 trading as Steve May Financial Services is a Corporate Authorised representative of Futuro Financial Services Pty Ltd ABN 30 085 870 015, Australian Financial Services Licensee, Licence number 238478.
Steve May and Luke Styles are Authorised Representative’s of Futuro Financial Services Pty Ltd ABN 30 085 870 015, Australian Financial Services Licensee, Licence number 238478