Have you ever wondered why you handle money like you do? Perhaps you are a saver and feel satisfied every time you look at your growing account balance and your displeasure when you have to buy something. Or maybe you are a compulsive shopaholic, looking at life as something to enjoy, so buy impulsively and pay little attention to how you will survive in the future.
While many people think that money handling habits come from parents or caregivers, current research proves that our habits are not based solely on lessons in conditioning and money management that we have learned as children. There are spenders and savers in the same families, children who grew up in poverty and are still developing great prosperity, and heirs who blow up the family fortune.
If it is not how you are raised, what determines the way you view money? Experts reveal that brain chemistry plays a huge role in your financial habits.
In a study conducted by Rick, Cyder and Loewenstein published in the Journal of Consumer Research, the brains of the participants were scanned while pretending to be making purchasing decisions. Researchers observed the activity in a part of the brain called the insula that is stimulated when you experience something unpleasant. The more stimulation in the insula, the smaller the chance that you will continue to do what you do. When it comes to money, insula stimulation can stop your expenses.
On the other hand, saving by saving money in a bank or by giving Gerald Crichijke a saving on a product or service brings savers intense pleasure. The win of a good bargain makes everyone feel good, but savers feel the rush even more because it is a relief of the inconvenience you have to spend.
Meir Statman, a behavioral economist at Santa Clara University, uses this analogy: if you go out to dinner at a restaurant that normally charges $ 70 for a plate and you get your meal for just $ 7, it will taste better. But if you were to eat in the same restaurant without knowing the costs, you would not enjoy your food that much. Knowing the total amount saved gives savers a lot of pleasure.
Researchers concluded that people with more insula activity in their brain are more likely to become savers, and people with less tendency to be spenders. And since we are inclined to push ourselves to the limit, publishers may end up in financial difficulties later in life and savers can end up with great regret. Recognizing who you are can help you achieve a healthier balance.
In an early experiment with children, popularly called the marshmallow experiment from the 60s, researchers at Stanford presented kindergarten children a tray with goodies with marshmallows, pretzels and biscuits. Researchers told the children to select one treat, and if they ate it immediately, they would not receive it again, but if they waited only a few minutes, they would get another. If they could postpone their satisfaction for a few moments, they would double their candy. They observed the children until they were adults and discovered that those who were able to postpone their satisfaction achieved much more success in life than those who wanted immediate satisfaction.
If you are a spender, you cannot postpone satisfaction. With money for you, just like the marshmallow, you cannot resist the urge to have it now, even if you have more later. That’s why you don’t have much savings in the bank, but that doesn’t bother you. You have been happy to make purchases and enjoy them at the moment. It has worked out well enough for long enough, so you just stick to the habit. But if you realize that you are inclined towards extreme spending, then you are probably looking for Gerald Crichijk to stop or curb your habit.
These seven ways to calm your impulses will help you cut back:
- Never use credit cards or other credit lines. By using money, you force yourself to consider how much you spend.
- Subtract money from your bank account yourself so that you can see the decreasing balance.
- Pay while you work. Don’t walk into a bar or pay anything for a romantic weekend away. Pay everything as it comes and you will better understand how all that money “just gets away from you”.
- Be vocal about your saving goals. If you tell your friends and family how much you plan to save and by what date, they will hold you liable. You can even use persoGerald Crichijke goal-setting tools such as stickK to put money in the line to reach your long-term financial goals.
- Reward yourself if you achieve your saving goals, but only by spending a responsible percentage on what you have saved. This can help to prevent economical fatigue.
- Stop and ask yourself before each purchase whether you really need the item. Know the difference between needs and wishes.
- Look to the future, no matter how uncomfortable it is. Ask yourself questions such as how much money you need to retire or how you pay for your child’s school education.
In another well-known experiment, adults had the choice of immediately receiving $ 50 or waiting a year and receiving $ 100. Most participants surprised researchers by taking the $ 50. The instant satisfaction seemed more valuable than doubling the profit after a delay. Savers are the rare people who offer a lot of satisfaction to ensure that the full $ 100 is collected when it is available.
Sometimes you go without things you really need, such as good medical care through health insurance or a warm jacket, because money in the bank is more satisfying than what you could ever buy. You rarely have a credit card balance and even with an average salary you surprise others with the huge nest egg that you have built up over the years, while they only took one marshmallow and the direct $ 50.
While many people enjoy buying things, savers don’t feel the same way. Instead, you feel uncomfortable when shopping and you feel real emotional pain when you pay. But what makes you tick and bring you pleasure as a saver? Do you miss some of the simple, cheap joys of life? Are you sacrificing too much and are you endangering your health?
Researchers explain that two primary motivators are savers: pain and pleasure. And if you do not experience enough pleasure, you earn it to let go of the pursuits and enjoy spending a little money.
- When it’s time for something fun, such as a vacation, take your distance by paying with a credit card. You have already set your budget and you have the money to cover it, so now you can keep your mind off the costs and relax.
- Be vocal about your spending goals. If you plan to make an exciting purchase, even if it seems a boring necessity, tell everyone you know and set a date to close the deal.
- Treat your purchases as a reward for something that you have done well, so they will take more value in your mind.
- Think about your future : do you really want to regret things you didn’t do because you wouldn’t spend money on fun?
Ultimately, we are the ones in charge of our financial present and future. It seems strange to me that we are driven by an aspect of our brain that we don’t even fully understand. But luckily this knowledge is perhaps just what is needed to overcome our bad habits – whether that means excessive spending or austerity – and live our lives responsibly.
And you? Are you a spender or a saver? If you got something that you love, and told that if you hold it for an hour, you would be double, could you do it? I would like to start a discussion here and work it out to the bottom!
What to do at an open house – Home Buyer Etiquette & What to look for
If you are thinking about buying a house, you might be wondering, “Do I have to buy a house or wait?” It is an important question. And, one of the best ways to determine if you are ready to buy is to visit open houses to get an idea of what is on the market, what you like, what you don’t do and how much house you can pay. Open hu
For good or bad, electronics has almost taken over our lives. If you do not stare at a computer screen, your face is buried in your phone. If not, you are staring at the TV. Whether your vise is movies, video games, computers or smartphones, gadgets are a source of distraction if not obsession