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

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?

Eight celebrities who hate saving
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Eight celebrities who hate saving

“I am a spender,” the former Formula 1 team owner Eddie Jordon told The Telegraph. “I've always been like that. Have I got worse as I've got older? Probably, though I'd like to think I'm not irresponsible, but if there's something I see and want, then I'll get it. My mum has a great expression: "There's no hem in that garment." What she meant was that you can't put money in the hem of the garment as it was the place that little old Irish ladies would hide their money. Whatever money I've made, I want to use, while not dying in a poor house. I don't want to leave money littering the place when I go, where people have rows with each other.”

Advice from Jo Gornitzki, a spokesperson for

“Eddie is right when he says that leaving cash behind when you pop your clogs can cause family feuds - but only if you don't plan who you want to leave your money too. A bit of forward thinking - gifting money away before you die and drawing up a solid will - and the former motor racing boss can make sure his wife and kids won't come last in the money race.”

“I’m definitely a spender,” the footballer Robbie Savage told The Telegraph recently. “For me if I’ve got it, I spend it. If I’m broke in five years, I’ll have had a great time. It’s the most difficult lesson I’ve had to learn about money: you can’t take it with you. I like spending on cars, clothes, food and wine – the nice things in life. Even though I’m a spender, I’m also a grafter and I work exceptionally hard to keep it coming in. I’ve had people have a go at me for this, but I’ve had some unforgettable experiences because of my work ethic.

Advice from Kirsty MacDonald, spokesperson for accountancy practice Jackson Stephen LLP:

“There is no doubt that Robbie is one of the hardest working sports professionals in the UK. He is rarely out of the media spotlight what with his punditry work, newspaper columns and lycra clad manoeuvres following his SCD appearances. But relying on always being able to work to maintain a lifestyle is dangerous. Robbie should know that it only takes one false move in the media and he may never work again. Such a risky strategy should be balanced with a contingency plan to cover some income for a period of time in the event of catastrophe.”

“I’m a definitely a spender,” the former Status Quo guitarist Rick Parfitt told The Telegraph in January. “ I’ve never been one to save. I live for the moment and I’m fairly extravagant when it comes to people around me. In the past, I could not resist buying cars. I had a stable full of them – American cars, sport cars, limousines, everything. I spent hundreds of thousands on them. I had about eight or nine at any one time. The cars were just strewn all over the drive. I’d come out every morning, look at the weather and think, what car should I drive today?

Advice from Jasmine Birtles, founder of

“Rick and other ageing rockers wouldn’t need to keep touring if they cut back on their spending and put the money instead into solid investments that grow over time and give them a regular income. It’s nice to be in a position to spend on the things you love but it’s a bit pointless spending so much that you have to keep working just to feed your spending habit. I always tell people to think about what they love and spend on that but save on things that don’t matter so much so that you can put money into savings and investments to work for you.”

“I am an unashamed spender,” former Blue Peter presenter Janet Ellis told The Telegraph. “I love shopping and I love the idea of a bargain and will shop online or in stores. We have a good lifestyle and don’t deprive ourselves of good holidays. I have in the past maxed out on credit cards and store cards, which I wouldn’t advise anyone doing. It was fun at the time, but in terms of how much you have to repay, it is ludicrous how much they charge.”

Advice from Jo Gornitzki, a spokesperson for

“As any girl knows there's nothing better than a bit of retail therapy every now and then. But the former Blue Peter presenter should be wary of maxing out on her cards. Credit cards are great - used in the right way. Used wrongly and they can end up costing you a fortune and in a mess that sticky back plastic just can't fix.”

“I’m definitely a spender, although I’m not an impulsive spender,” the James Bond actor Roger Moore revealed to The Sunday Times. “If I go shopping, I usually know what I want before I go out. I’m not a very good saver because the lessons my father tried to instil in me about taking care of money had the opposite effect. I carry cash in my pocket as I always like to have it to hand, which means it also disappears easily as I spend it more quickly.”

Advice from Kirsty MacDonald, spokesperson for accountancy practice Jackson Stephen LLP:

“As James Bond, Roger Moore became iconic as a smooth operator. But there is nothing smooth about the way he is handling his cash here. There seems to be no control over it at all. Whilst it’s hard to be sympathetic with multimillionaire film stars, Roger’s cash leakages are probably losing him a lot more than he realises.“

“I've got some savings for a rainy day, but I don't bother looking to see if I might get a better interest rate elsewhere,” the comedian Justin Lee Collins revealed in an interview with The Telegraph. “I don't have the time or the inclination to shop around at the moment.”

Advice from Jasmine Birtles, founder of

“The sad thing is that Justin is at an age where even relatively small amounts of money put into a good investment like stocks and shares will grow into something really impressive in later life. The younger you are, the more time your investments have to grow and so the bigger they will be when you retire.

“The earning-power of a comedian can be volatile so it’s helpful to have a serious cash cushion to dip into in the bad times and help invest in your career to push it one when it seems to be faltering. It’s true that shopping around for a better savings rate right now can seem pointless but if you’re willing to tie your money up for a few years there are some good deals to be had, particularly in the peer-to-peer companies like Zopa, Ratesetter and Funding Circle. You can get, on average, between 4.5 and 5.5% with those at the moment, which is significantly better than ordinary savings accounts.”

“I’m definitely a spender,” the international playboy Howard Marks recently told The Telegraph. “When I was growing up I wondered what it would be like to win the pools. The prize money was something like £75,000. Later I had much more than that, with cardboard boxes of cash under my bed. I was very, very flash with my spending. I would fly first class, stay in five-star hotels, buy fast cars, big cars. I don't regret investing more wisely - I enjoyed it all.

Advice from Jo Gornitzki, a spokesperson for

“While I don't blame Howard for splashing his cash, the former drug smuggler and author should make sure his fortune won't go up in smoke. Yes, you should enjoy your money, but also make sure you have enough to last in old age.”

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