Your Brain May Be Wired for Either Spending or Saving Money

by Dana George | Updated July 21, 2021 - First published on April 21, 2020

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Your brain is powerful, but you can override its financial messages. Here's how.

What if I told you your brain helps determine whether you're a spender or a saver? You make the final conscious decision regarding a purchase, but according to neuroscience, your brain (and emotions) weigh in. 

Scientists in neuroeconomics have come up with differing theories regarding which parts of the brain control the impulse to spend or save, but there's consensus around the idea that several regions are involved -- each handling a specific task. Two studies of the phenomenon make interesting observations, and also raise questions.

Instant gratification vs long term anticipation   

Scientists set out to discover why some people seem to easily delay gratification while others live purely in the moment. Researchers put volunteers into functional magnetic resonance imagining (fMRI) machines and watched how their brains reacted to scenarios. 

In one sequence, participants were offered $100. Immediately, the ventral striatum (tucked deep inside the brain) and the medial prefrontal cortex, or PFC (just behind the forehead), experienced a spike in activity. The MRI images showed that participants were clearly excited. 

When it was suggested that test subjects would have to wait one week to receive their $100, activity in the ventral striatum and PFC slowed in some participants. For others, activity remained high. 

Finally, participants were told they might have to wait even longer than one week to receive $100. Among the subjects whose brain activity dipped at the thought of having to wait a week, activity then slowed dramatically. For others, brain activity in the two key regions remained activated -- whether they would receive the $100 immediately or at some future date did not diminish their excitement. 

The goal for researchers now is figuring out why some people respond primarily to immediate gratification while others are happy to wait for a reward. It also raises the possibility that we might be able to retrain our brains in a way that moves us from "spender" to "saver."

Pleasure and pain

We homo sapiens have been on this planet for roughly 200,000 years. But we're still not sure why we waste money. 

In pursuit of answers, Researchers from Carnegie Mellon University, Stanford University, and MIT Sloan studied MRI images of people's brains as they made financial decisions. What they discovered is that the nucleus accumbens -- the "feel good" center of the brain -- lights up when people contemplate a purchase. When those same people think about how much a specific purchase is going to cost, it is the insula -- a tucked-away part of the brain described as the "seat of disgust and pain" -- that lights up.  

For some, the need to feel pleasure outweighs all other considerations, and they depend on immediate gratification to give them a boost of dopamine, a "feel good" hormone. For others, the pain associated with spending money they don't have or don't wish to part with keeps them from making unnecessary purchases. 

Making a change

Why do some people answer the siren call of the nucleus accumbens while others heed messages from the insula? The research is ongoing. In the meantime, there are things each of us can do to find balance.

If you've ever been called a miser because it pains you to part with one penny more than necessary, own the fact that you're listening to your insula. There is nothing wrong with saving money. In fact, investing in your future is a brilliant thing to do. What isn't as pleasant is denying yourself pleasure in life. If your bills are paid, you've got an emergency fund, you're saving for your financial goals, and you're investing in a retirement plan, it's perfectly reasonable to override your insula by having a little fun on occasion. 

Even if it hurts a little at first, do something special like going on a weekend trip, buying something for your home or yard, or otherwise reminding yourself that life is for the living. There's no shame in spoiling yourself a little after your obligations have been met. 

On the other hand, if you simply can't pass up a sale, have no emergency savings, are not preparing for major life events, and haven't begun investing for retirement, it's time to override the nucleus accumbens. Here are some ideas that can help:

  • Pay your credit card balances in full each month. Not only will it improve your credit score, paying in full reminds you that impulse buys have a price. 
  • Track your spending. No matter how good it feels to spend, you may be surprised how much of your money goes toward purchases that don't really benefit you. 
  • Ask a financially responsible friend or family member to be a mentor and teach you how they make their budgets work while leaving room for fun. 
  • Make saving automatic. Set things up via your bank or credit union to send a certain percentage of each paycheck into savings. 

The emerging field of neuroeconomics continues to grow, but we can already employ its findings to better understand how to override the impulse to needlessly spend. Like any habit, the more we practice, the easier it becomes.  

So go ahead -- let that nucleus accumbens and insula arrive at a happy truce. Your finances will thank you.

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