Re-wiring the brain to save for the future

Two recent articles provide interesting insight into how the brain works - why most of us tend to opt for instant gratification over future rewards, what that means for our financial futures and how we might re-wire those neural pathways.

Sharon Begley's article in Newsweek - Stop You Can't Afford It - How science unveils how your brain is hard-wired when it comes to spending - and how you can reboot it provides a fascinating journey through neuroscience brain mapping.  It turns out the brains of those who naturally default to save or delay gratification are different from those who opt for immediate rewards. What's more, scientists are looking at ways to amp up the save circuits and amp down the spends.

Even though brain scans suggests hard-wiring, brains can learn. How do they learn?  Through practice, researchers say.  Scientists also found that a squirt of the hormone oxytocin - known as the "love hormone" because of the role it plays in bonding - makes people more patient and likely to opt for future rewards over instant gratification.

One of the keys to changing the brain circuitry is the ability to project yourself into the future and see the future you. It seems we can't get excited about saving for something we can't see or feel connected to.

The second article Face Reality With Aged-Morphed Photos (Wired - Nov 1)  references work by Jeremy Bailenson, head of Stanford’s virtual reality lab and coauthor of the book Infinite Reality. Bailenson discovered that avatars or virtual versions of our selves can help us make positive changes, including saving for retirement.

Most people view their future selves as strangers, which makes them reluctant to put away money for a later date. But Bailenson and his team discovered that if people view a virtual version of themselves digitally aged by several decades, that hesitation disappears instantly. In one study, contributions to hypothetical retirement accounts went up by 30 percent.