What ultimately led me to be able to handle my condition, and I think would also work wonderfully for financial problems, is something like cognitive behavioral therapy. All of us find ways to justify our behavior, even if subconsciously. But most people never notice the little devil constantly on their shoulder giving them the bad advice.

The goal is to learn to catch, identify, and ultimately deal with the precursor thoughts and feelings that lead to the problems. You would be amazed at just how much we actually try to hide from ourselves in order to justify our behaviors.

I know that most people are inclined to see a distinction between the two, and that influences how they approach problems like spending vs. savings - “I just can’t control myself!” for example. The inability to save money is seen as a struggle between two factions, only one of which is considered to be “me” - “Me” vs. “my impulsiveness”.

But one of the findings of cognitive science is that consciousness and the body (which includes the brain) aren’t two separate things. Daniel Dennett has written about this for years, among others; and I’m in the middle of the book “Philosophy in the Flesh” by George Lakoff and Mark Johnson which talks about this, too.

I guess the point I’m trying to bring is this: it’s easier to manage one’s impulses if one can integrate those into one’s idea of ones’ self, I believe. We only use the metaphor of “struggle” because we’re pushing the impulse out of our identity.

Wow, sorry if this is incoherent. The English language doesn’t do a very good job of helping me describe all this…

At any rate, thanks J.D. for the article. Definitely interesting to me for both science-y and personal-finance-y reasons!

Interesting post.

Keep in mind that just because it’s physiological it doesn’t mean it’s not learned, or that it can’t be altered! There are lots of examples in neuroscience of these types of reward-associated responses being completely learned - they can be triggered by things like a bell that always precedes your being given a piece of cake, for example. They can also be affected by attention - if you are exposed to a situation that has some things you associate with good outcomes and some associated with poor outcomes, anything that affects which of these things you focus on (be it an outside intervention like a verbal reminder, a spotlight on part of the scene, or just habit) will affect the response, too.

Point being: if you consciously force yourself to think “yes, but, my goodness this cost is huge - think of all I’ll be giving up to buy it! Think of the empty checking account! Think of the stress and worry of being potentially short of cash, and what that does to my marriage! But, think how good I’ll feel to have made it home with my financial state intact!” …even if it feels weird at first and takes a while to sink into your basic automatic thought patterns, it will in the end start to affect things like the responses being discussed here.

- Your Friendly Neighborhood Neuroscientist

This is a great question, of course. I think the answer is: “it’s a little of each”. While the research in this article indicates that their are physiological responses to money, I do not believe this comes anywhere close to accounting for the whole answer.

For my part, I know that many of my money habits are learned. My parents modeled poor financial skills, and I learned them quite readily. The fact that my brain is all-to-happy to reinforce these poor behaviors simply exacerbates the problem.

I almost think the fact that there’s a biological component to this behavior makes it more important to consciously cope with the money, to be mindful about spending. The article sort of downplays rational money decisions, yet I think that learning to make smart choices goes a long way to overcoming the brain’s natural responses.

Very interesting post. I wonder if this behavior is hereditary, learned, or a combination? Are we pre-disposed to spend/save?