When you break down the advice those in the personal finance world would give you to go from financial ruin to financial freedom, there is one core commonality: it’s all about delayed gratification.
We withhold more of our take home pay to pad a retirement account we may not see for 40 years, we shuttle money into savings accounts that will pay for big purchases later, we pay down debts today in order to free up cash for tomorrow.
It’s all about waiting to get the biggest bang for your buck.
So why is opting for delayed gratification so easy for some, while others can’t seem to think past the $200 pair of shoes staring them in the face today?
According to research outlined in this Newsweek article, it might have to do with your brain.
“Psychologists and behavioral economists, meanwhile, are identifying the personality types and other traits that distinguish savers from spenders, showing that people who aren’t good savers are neither stupid or irrational – but often simple don’t accurately foresee the consequences of not saving. Rewire the brain to find pleasure in future rewards, and you’re on the path to a future you really want.”
While scientists have been experimenting with artificially activating the areas of the brain that encourage saving, they’ve found that our environment can have just as much of an effect on our spending habits as how our brains are wired.
They’ve discovered, for instance, that after giving test subjects a shot of the hormone oxytocin (dubbed the “love hormone” because it encourages maternal bonding), they were more likely to react favorably to the idea of delayed gratification. So what does that mean?
Those who are happy and feel that they are supported are more willing to wait until the future to receive the payout.
These findings can be translated into 5 tips to help you save more and spend less:
Build relationships, not stockpiles.
The stronger your relationships are, the less likely you are to turn to material possessions to fill the void. Not to mention that you have a support system that you can access for help and that will hold you accountable if they notice your spending habits are out of control.
Take an either/or approach.
Before handing over your credit card, consider what you will be giving up if you make that purchase. For example, if you spend $200 on clothes today, you won’t be able to go out to dinner with your friends later. If that trade off works for you, go ahead. If it doesn’t, don’t buy it.
Picture your future self.
Often times we fail to save because aging seems like an abstract concept. We can’t imagine what life will be like – or what we will be like – 10, 20, 30 years down the road, so we go on living today like tomorrow will never happen. Studies have even shown that when we think about our future selves, we use the same part of the brain that we use to think about a stranger.
So try one of these new programs that will give you glimpse of yourself at retirement age. At least it will get you thinking about your future self.
Set money goals.
Saving just for the sake of saving doesn’t generate the same kind of excitement and determination as putting your money aside to achieve a certain goal. Give your money a job and you’ll be far more likely to avoid purchases or actions that make the path to achieving what you want longer.
Change your environment.
If studies have shown that your environment impacts your ability to opt for delayed gratification (especially as discovered in the famous marshmallow experiment), then consider altering yours. Make new correlations between waiting on something and the reward at the end – even if you have to trick yourself in the process.
What do you do in order to be okay with delaying gratification? Share your tips!