It’s not just a lack of self-control – new research suggests we’re hardwired to overlook the importance of saving.
As a child, I was a saver. Birthday and Christmas money would last me for months, not because I had so much of it, but because I hated the thought of wasting money on a purchase I’d later regret. Rather than fritter it away, I’d tuck my crumpled bank notes into the back of my jewellery box and think carefully about what I actually wanted to spend them on.
In adulthood, though, my approach towards saving is rather less meticulous. At the beginning of each month, I put the same percentage of my pay cheque into a savings account – but inevitably end up transferring some of that money back onto my Monzo card in the week before payday.
Theoretically, I’m saving towards all the traditional markers of adulthood: I know I need to have money behind me if I ever want to own my own home, have children or retire before I’m 85. But at the moment, those milestones still seem faraway (or, in the case of buying a property, hopelessly out of reach).
Expenses such as buying a birthday present for a friend or paying an unexpected bill, in contrast, feel like they need to be taken care of right away – hence my habit of dipping into my savings.
I know I’m not alone. Recent research by the Financial Conduct Authority shows that one in three UK adults only have savings of between £1 and £1,999, and 12% have no savings or investments at all. One in eight adults have no cash savings whatsoever. But why are we so bad, as a nation, at saving money?
Some of it is undoubtedly down to poor financial literacy. Many of us are simply never taught how to look after our money, causing some experts to argue that financial education should be a compulsory part of the school curriculum. But according to new research by neuroscientists at Cornell University in the US, the human brain also has a cognitive bias against saving.
A new study published in the journal Nature Communications shows that humans are hardwired to prioritise earning money, which unconsciously means that we pay less attention to saving.
On a day-to-day basis, we focus less on saving, and may even devalue it as a concept – which can eventually have a serious knock-on effect on our future wealth.
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“Fundamentally it comes down to this: saving is less valuable to our brains, which devote less attentional resources to it,” says study co-author Adam Anderson, associate professor of human development at Cornell University.
“It’s more than a financial problem of making ends meet. Our brains find saving more difficult to attend to.”
The study shows that our cognitive bias in favour of earning is so powerful that it can even warp our sense of time. In other words, our intense focus on earning money means that we perceive the need to save as less urgent than it actually is. (See: my conviction that the big life events I’m saving for are a long way off.)
Of course, we need to earn money before we can save it – but, researchers say, our focus on earning may mean that we are missing good opportunities to save.
“Even without bills to pay, our brains put a thumb on the scales, making it easier for us to earn than save,” Anderson says.
The study’s co-author, Eve De Rosa, says this is because the brain generally pays less attention to saving. “Saving is so devalued and unattended that we perceive events associated with saving as occurring later in time,” she explains.
However, none of this means we’re doomed to be bad at saving forever. The researchers believe that the brain’s cognitive bias towards earning is probably a learned trait, rather than an evolutionary feature – which means that if we try hard enough, we can unlearn it.
Anderson suggests trying “attentional retraining”, making a conscious effort to pay attention to our savings.
The numerical amount we save is actually less important than the fact we’re keeping an eye on our savings at all, he says: “It’s practicing attention and intention to save, to strengthen the value of it for your brain. It’s not the amount of dollars that matters.”
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