Your brain is hard-wired to stop you saving for the future

The unexpected reason we’re not saving - and how to trick yourself into doing the right thing

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Undermined savings

If you ask people why they're not saving for the future, you'll get a huge range of answers. They'll tell you that they cannot afford it, they'll blame the cost of living, or they'll tell you they have too much else to worry about at the moment. In reality, however, one expert suggests there's another reason lying behind our unwillingness to save - and it's something we're all guilty of.

The ING International Savings Survey found that almost 30% of people have no savings at all, and of those who have something set aside, more than a third have less than three months of salary saved up.

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Nathalie Spencer, a behavioural economist with ING calls the phenomenon 'satisficing'. The idea is that for most people, sticking with their current non-saving habits seems to be 'good enough'. As long as the rainy day hasn't hit, then we haven't seen the downside of spending everything we earn, so we think we're getting away with our current approach.

Deep down, we know we should be saving for the future, but the effort required to change our behaviour feels like too much pain for not enough benefit.

The fact that we think we're doing 'well enough' can be gleaned from the fact that when asked to what extent they were happy with their level of savings, a third of people said they were comfortable, and a third of people said they were uncomfortable - and their feelings often didn't translate to the amount they had saved.

Spencer points out: "Eight percent of people say they are comfortable with their level of savings, yet have no savings at all. Are people being overly optimistic that no unexpected expense will pop up, or is this an extreme example of head burying, with people happier to live in ignorance than prepare for difficult times? The truth is, even in the face of difficult times, we are human: sticking with what we know, avoiding bad news and remaining optimistic - sometimes without due reason."

What can we do?

Optimism in the face of facts is something that's incredibly hard to overcome. However, we can encourage ourselves to save - by reducing the pain of saving - and boosting the benefits that we see.

The easiest way to reduce the pain is to ensure that our savings come out of our account on the day we are paid, so that we never consider it as part of our income. Alternatively, we can sign up for a service like Plum, which uses artificial intelligence to work out what we can save, and when, and then removes small sums of cash from our account on a regular basis - when we can afford it. The tiny sums go unnoticed, but gradually build up a savings pot.

Increasing the benefit means offering yourself some kind of reward for your savings. This can be monetary, so that every time you hit a savings target, you can spend a fraction of the cash on something you want. Alternatively, it can be something you simply associate with your savings. So, for example, you could allocate a boxset on Netflix (it has to be one you really want to watch), and decide you are only allowed to watch the next episode when you have saved another £50.

Behavioural scientists have discovered that this kind of reward works for gym attendance (people go more if there's a box set they are only allowed to watch after a gym session), so why not try it for your savings?

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