skip to log on skip to main content
VoiceOver users please use the tab key when navigating expanded menus

The psychology of saving

Is there science behind saving? Can we program our brains to spend less cash?
Here, we dive into the psychology of saving to see what’s possible.

On the couch

Humans are an interesting bunch. Look at how we have evolved from (some would argue) hairy apes to purse-clutching citizens who choose to spend money on brand-name bottled water – even though H2O falls freely from the sky. We also choose to pass our time binging on television shows that imitate our medieval past, but that’s another story.

Exploring why we do what we do is the stuff of behavioural psychologists. They ask the important questions like, ‘What drives us to spend our hard-earned money on wine and chocolate even though we are trying to save up to buy a house?’. Or, ‘Why is it so important for us to wear designer-label fashions, even though our pay packet doesn’t really allow it?’.

When it comes to the psychology of saving, it’s the field of behavioural economics that we’re particularly interested in. Indeed, the whole world is right now, with American academic and noted behavioural economist Richard Thaler recently being awarded the 2017 Nobel Economics Prize. Thaler’s work is based on the premise that we humans are, well, human – that is, prone to irrational decision-making that gets in the way of shrewd saving.

Thaler’s astute observations may sound a little grim if you’re hell-bent on saving some cash. So what can you do about it?

To see how you could use the psychology of saving to your advantage, and perhaps program your brain to save more money, let’s explore the principles of cognitive behaviour therapy (CBT).

Get to know you

To see how you could use the psychology of saving to your advantage, and perhaps program your brain to save more money, let’s explore the principles of cognitive behaviour therapy (CBT). Essentially, CBT is a type of therapy that helps you to change unhealthy habits and ways of thinking.

On the money-saving front, CBT could help you change a habit of dropping $200 on the bar on a Friday night, for example, by teaching you how to switch to be more careful with how you spend your money.

Many cognitive behaviour therapists come at issues from a number of different angles. Here are some of the ways that CBT could help you save:

  • Challenge your perceptions – rethink what you think is certain about your life. For example, you may think that you don’t earn enough money to bother trying to save any. This is not necessarily true – rather, you might just have to reconsider your perceptions of what is worth saving. Sure, you might not be able to afford to put away $100 a month. But what about $20? Or even $10? Some people reach their savings goals simply by squirrelling away their spare change.

  • Identify triggers – what triggers (like people, places, occasions, emotions, or thoughts) precede a behaviour you want to change. Using the Friday night example, what makes you want to spend $200 on drinks after work? Is it emotional release from a tough week? Is it to keep up with your workmates? Is it your reward for making it through another week? Try to change things – for example, you could make a date with a friend outside of work to go see a movie instead. Or, invite your workmates home (BYO allowed). Get more tips about changing your habits here.

  • Challenge the reward system – there’s a belief that rewards lead to a behaviour repeating itself. For example, do you get a buzz when you buy a new jacket? It’s normal – buying stuff makes people happy. And happiness equals reward. How can you replace the instant buzz of an unnecessary (but fun) purchase with another reward to help you save? Keeping your eyes on the prize gives you a new reward to focus on.

By having a little awareness of some of the things that are stopping you from saving, then you have the power to do something about it. You don’t need to book a session on the couch with a psychoanalyst … yet. Instead, have a think about your relationship with your money, as see if you can find a way to make a change.

The information set out above is general in nature and has been prepared without taking into account your objectives financial situation or needs.  By providing this information ANZ does not intend to provide any financial advice or other advice or recommendations.  You should seek independent financial, legal, tax and other relevant advice having regard to your particular circumstances.