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Your Brain on Savings

There’s actually a positive side to being stuck at home. Personal savings have skyrocketed. But my guess is that when the pandemic passes, savings will plummet.

The fault may lie in our brains.

A recent study by Cornell University neuroscientists discovered that our brains are biased toward earning and against saving. Perhaps it’s the immediate gratification our paychecks offer while putting aside small amounts feels about as gratifying as watching grass grow.

“Fundamentally it comes down to this: saving is less valuable to our brains, which devote less attentional resources to it,” said the co-author Adam Anderson. “Our brains find saving more difficult to attend to.”

Yet fixating on earnings can be fool hardy. I call it the Illusion of Affluence. I see it all the time. Successful women spending too much, saving too little, plowing all profits back into their businesses or on classes for personal growth (deceptively calling it “an investment”).

Their ample earnings gives them the illusion, but not the security of true abundance. The real measure of wealth is your net worth…not what you earn but what you keep.
If you’ve never been a saver, why not use this time in lockdown to rewire your brain until savings becomes a habit. Each night drop any loose change from your wallet into a jar and every month, bank the savings. Stuck at home and not out spending? Try transferring the amount you’d have spent on lunch and coffee each week into savings.

I once had a client who, on the day her grandson was born, quit smoking, putting the daily cost of the cigarettes directly to savings. By the time her grandson graduated high school, she could pay his college tuition.

Another began collecting coins she found in pockets doing laundry and cash from the coupons she redeemed at the market to make her first purchase of stock—3 shares of Disney.

If you’re a high earner, or on course to becoming one, ask yourself this question: Isn’t it time my money works as hard for me as I do for it?

Comments & Feedback

  • Lisa

    Hello Barbara,

    Such an emotional article. My Grandparents came to Australia with literally the clothes on their back after being held prisoner at a workcamp in Nazi Germany. Because they were taken out of school by Nazi’s, they only had a 7th grade education, never learned how to read , write or speak English properly, yet managed to buy their own home, send my mother to business college, modelling school (lol) and equestrian school. They did so much with such little income. Grandpa first worked on the railroad, then worked as a sewing machinist in a clothing factory. Grandma cleaned offices and hospitals. She’s 95 and still lives in the house. I think the house symbolizes her dignity and hard work. She’s so proud about what it’s worth now.

    I like what you wrote about the “illusion of affluence”. I know someone who always seems to have faith and hope in a big idea that will quickly pay off all her debt and turn her into a millionaire overnight. The problem is she usually quits after she starts.

    • barbara huson

      What a remarkable story about your grandparents, Lisa. I was very moved reading it. You certainly do come from good stock. And that’s a very sad story about your friend who quits too soon. The difference between the two stories is quite enlightening! Thanks so much for sharing it with me.

      • Lisa

        Thanks, Barbara. Your work is always so well researched.
        I wonder if people’s brains were rewired differently for saving back in the day?

  • Karen McCall

    Hi Barbara, This is such an important blog. I’ve realized for some time that there is so much written about getting out of debt and not enough about learning to save. Even though I’ve know it is important and I include it in my “Save Your Way out of Debt” program I’ve never thought about the brain science that you are presenting here. I’d love to interview you and update my eBook on the topic.
    You are doing amazing work as usual. I love, respect and adore you and I appreciate your body of work.
    Thanks a million!
    Karen McCall

    • barbara huson

      Karen, I’m thrilled you liked this blog. Integrating brain science into wealth building has been so profound. I’d love to do an interview…heck, I’ll do anything where I get to hang out with you!! I absolutely adore you too Let’s talk.

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Meet Barbara Huson

When a devastating financial crisis rocked her world, Barbara Huson knew she had to get smart about money… and she did. Now, she wants to empower every women to take charge of their money and take charge of their lives! She’s doing just that with her best-selling books, life changing retreats and private financial coaching.

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