Ever wonder why it’s so hard to save money? It’s not just lack of will power. It turns out, the science behind saving and spending is rooted deep in your brain. Neuroscience helps explain why your wallet might be feeling a little light.
The Limbic System
The limbic system is responsible for our emotions and motivations, including the desire to buy something or spend money. When we see something we want, the limbic system kicks into gear and activates our reward system. We feel pleasure IN ANTICIPATION of purchasing something we want, which reinforces our desire to do it again. That’s why it can be so hard to resist buying things impulsively – the reward system has already been activated before we even make a purchase. And guess what, your brain is addicted to the little high it gets when you reward it with a fun purchase.
The Prefrontal Cortex
The prefrontal cortex helps us regulate our decisions and actions based on reason and logic. This part of the brain is responsible for impulse control and delayed gratification, making it much easier to put off buying something until later (or never!). Unfortunately, this part of the brain isn’t fully developed until adulthood – which explains why kids have such a hard time resisting candy in the checkout line. In some people, this area never fully develops. Thankfully, there are ways we can use this part of our brains to help us make smarter financial choices.
The Insular Cortex
The insular cortex plays an important role in understanding how much money we have by monitoring our savings account balance. The ‘Insula’ manages emotions, risk-prediction functions, and decision making processes amongst several other functions. This means when you see a changes in money levels in your account, the Insula sends signals throughout the brain when there’s a decrease in cash flow – like when you check your bank balance after a night out with friends! The insular cortex also helps us plan for future purchases by managing information about what we need versus what’s nice to have. Lastly, this part of the brain helps us distinguish between needs and wants – which can be incredibly helpful if you’re trying to rein in your spending habits! The only issue is that it also manages emotions. In essence, it puts a finger on the scale which tips it towards good-feeling rewards.
Here’s the kicker
Your Limbic system (the part that processes emotions) gets information before your prefrontal cortex (the part that processes reason and logic). So, your Limbic system often has a good-feeling decision ready to go before the Prefrontal Cortex has to jump in and say ‘now hang on a minute.’ And, your Limbic system releases chemicals that make you feel good in anticipation of a reward. So, it can be tough to overcome that good feeling with good logic.
Our advice? Develop an ‘interruption mechanism’ like counting to 5 and thinking of the image of the numbers in your head before putting something in the basket. Or have a consistent ‘go-to’ image (a specific scene) in your head that is different from the purchase you are making like your family at a specific beach. The idea is to force your brain to slide over to process the counting or image before it continues evaluating the purchase. That interruption pauses the good feeling from your limbic and gives your prefrontal cortex time to catch up.
So, next time you reach for your wallet or navigate to Amazon Shopping, remember that it’s not all up to willpower – there’s some serious science at work here too. Knowing how different parts of your brain affect financial decisions can help you get better at saving money and resisting impulsive purchases. So don’t beat yourself up if saving seems like an uphill battle – sometimes it just takes a little bit of neuroscience know-how.