5 Brain Hacks to Improve Your Finances

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If you’re struggling to turn around your finances, the last thing you probably need is for one more person to tell you to curb your spending or increase your savings to ensure a healthy retirement. You already know what you can to do to help improve your situation. The challenge is to get yourself to actually follow through on the actions you know are good for your pocketbook.

Whether you’re trying to cut debt or bulk up your retirement portfolio, closing the gap between your actions and good intentions may be one of the hardest challenges you face. Despite people’s best intentions, many people act irrationally when it comes to managing their own money. 

Luckily, there are some simple behavioral tweaks you can make to help nudge you in the right direction. Here are just some of the changes you can make to your behavior in order to make it easier to follow through on your goals:

Practice mindfulness. Retailers routinely use environmental cues and psychological tricks to nudge you into spending. For example, they’ll use music, lighting, color or scent to prime your mood or will alter displays so you’re more likely to reach for a particular product. To help blunt the urge to buy something you don’t need, take a deep breath the next time you walk into a store and slowly take in your environment. Scan the shelves and the store’s signs for clues to how a store might be trying to manipulate your attention.

Notice, for example, how a grocery store places marshmallows and chocolate alongside hot dog buns to make you think about camping or how an electronics store places the most expensive products at eye level and the cheapest products on the bottom shelf.

Refocus your attention. People often get into trouble because they anchor their attention on a specific value, such as a price or the amount due on a bill, and become overly influenced by it. For example, when you’re shopping at a store, you might focus your attention on the $100 price tag of a coat that’s displayed on a mannequin and suddenly think the $50 coat next to it is a bargain in comparison. Similarly, research has shown that people will often pay less toward their credit card when they focus on the minimum amount due than they would if the minimum amount wasn’t displayed.

To shake free of the anchor biases influencing your decisions, look for ways to proactively refocus your attention. For example, when you receive a credit card bill, use a highlighter to draw your attention to the total balance, not just the minimum amount you have to pay.

Take care of yourself. How you feel and what you spend your time on could also subconsciously influence your decisions. For example, research has shown that people tend to spend more when they’re hungry. Similarly, people have a harder time making sound financial decisions when they are mentally depleted. To make sure you’re in the right mindset to make smart decisions, attend to yourself physically and emotionally. Eat before you shop. Get enough sleep. Check in with yourself emotionally before you visit a store online.

You may also want to schedule important meetings — such as a visit with a lender or your financial planner — for earlier in the day so that you aren’t making big decisions when you’re physically or emotionally exhausted.

Look ahead. Outsmart procrastination by visualizing yourself in 10 or 20 years. People tend to value the present more than the future and make decisions based on how they’re feeling in the moment. But research has shown that thinking about yourself in the future can help fight this tendency by shifting your perspective. People tend to save more and procrastinate less when they vividly imagine their futures. Similarly, a recent study published in the journal, Psychological Science, found that imagining a specific outcome — such as running out of money — may prod you to be more patient.


Embrace automation. Another way to get around whatever psychological quirks are holding you back is to delegate your responsibilities. Rather than pay your bills yourself, set up automatic payments. That way, you aren’t tempted to pay less than you should or forget to pay altogether. Similarly, to increase your savings, opt for automatic withdrawals so your savings aren’t negatively affected by inertia or faulty decision-making. You may find the more you automate, the better off your finances.