For Financial Success, Train Your Brain to Love Saving Money

Is it possible to turn the act of saving money from a chore into an enjoyable activity? Much like how a “shopaholic” can become addicted to spending money due to the psychological thrill, can we instead re-wire those neurological pathways towards a more constructive goal? I think so; if there’s such a thing as a “save-oholic” that might just be me!

I took a look at my bank account the other day and it was absolutely stuffed, to the tune of about $5,000 beyond what I keep on-hand for my emergency fund. I sent $3,000 off to my down payment fund, then bought $2,000 worth of stocks in my Roth IRA. And it made me feel good.

There’s evidence that shopping and spending money stimulates the dopamine reward pathways in our brains. Dopamine is responsible for reinforcing behaviors by acting as a feel-good teaching signal. Of course, in terms of building wealth, excessive spending is a destructive behavior and the exact opposite of what I’d advocate for. So is there a way to hijack your brain’s circuitry and train yourself to love saving money instead?

In my experience, yes. It’s not too much of a stretch to view what you’re saving as spending instead, if you just shift your perspective a bit. And I don’t just mean something like, “well, you’re technically buying stocks and bonds in your investment accounts.” That’s hardly a tip worth writing about, so I’ve got a bit more of a paradigm shift for you today.

Change your perspective on how you define saving

When you save and invest — especially with the goal of early retirement in mind — you are quite literally buying your time back. You are trading cash flows today in exchange for controlling more of your own time in the future. Someone with a 40% savings rate for example would need to work just under 22 years before they could retire and live off their investments. Compared to a typical 40 year career, our hypothetical saver is buying back nearly two decades of freedom.

Compound interest makes all of this possible. $100 invested at 5% real interest for 30 years becomes $432 in today’s dollars. Would you “spend” $100 today to receive $432 in 30 years? What about $702 in 40 years? It’s almost a no-brainer if you’ve got the cash to spare.

Completely anecdotal experience: I’ve found that thinking of saving money as me buying my future freedom in early retirement delivers a similar physiological response to that of making a satisfying consumer purchase. For me at least, it’s been an effective way to train my brain to love saving, and it’s something I’ve been doing for the past several years of my FIRE journey. At this point, it’s a subconscious reaction: when I make a positive financial decision, it makes me feel good too.

The flip side, effecting thoughts on discretionary spending

After making an effort to change my perspective on saving, there was a less-intentional side effect in that I noticed my reaction to spending shifted as well. More specifically I’m talking about discretionary spending, or everything other than your necessary living expenses.

I often feel regretful or guilty when I’ve spent money on something that wasn’t a good value or a worthwhile purchase. A restaurant meal that I could have made better myself at home? Frustrating. A new gadget or electronic device that doesn’t live up to the hype? Regret. Going far over budget for the month? Guilt.

I think the root cause of feelings like that is once you know the opportunity cost that you’re losing out on by not investing and compounding your discretionary income, it just doesn’t sit right to waste it on purchases that don’t feel worthwhile. It’s important to recognize that while these negative feelings can offer learning experiences too, you shouldn’t dwell too much on them.

Don’t let it overwhelm you to the point of becoming a miser. Some discretionary spending is necessary to enjoy life along the journey to FIRE. As always I advocate for finding a balance; absolutely do not feel bad about discretionary spending as long as you’re meeting your savings goals. Similarly, set your budget in such a way that you’re leaving room for the discretionary expenses that truly bring value to your life. Finding this balance is part of the self-discovery on your own personal path towards financial independence.

Keeping sight of the long-term view

There’s also something to be said for the fleeting nature of the feeling from those small hits of dopamine, when compared to the omnipresent, general feeling of contentment that comes with financial security. The former are simply your building blocks and training tools along the road to the latter. It took me about two years into my own journey towards financial independence to finally feel like I was making headway. And another two years after that to start feeling some semblance of security in my financial situation.

Changing your behavior is just one step — though likely the biggest one — in the marathon that leads to financial success. To that end, training your brain to love saving money seems both possible and highly beneficial. As always, mindfulness and intention are the keys to self-improvement. This method may be exactly the tool that you need to jump-start your FIRE journey, or give you the motivation that you need to stay the course.

Thoughts? Questions? Leave a comment below!