Budgeting apps and spreadsheets may help people get their finances in order, but neuroscientist Moran Cerf says there is a simpler way to save more money: Live life on one financial timeline.
Consider a typical American consumer. She gets paid twice a month, pays her bills once a month, goes grocery shopping maybe four times a month, eats three meals a day, and pays off her college loans over 20 years.
“All those metrics confuse our brain,” Cerf, an assistant professor of marketing at Northwestern University, told Business Insider.
Cerf’s solution is for people to experiment with different timescales — days, months, quarters, even years — to eventually find just one that works for most purchases.
One person, for example, might decide he needs to give himself a daily allowance and that’s it. Once he sets aside the money he’ll need for fixed costs, such as bills and loans, he allocates the remainder as a per-diem. Every purchase gets filtered through the lens of “Can I buy this today?” If the answer is consistently yes, he’ll never go over-budget for the month.
Someone else, meanwhile, might find she needs to think on the order of every month, or quarter. Maybe she has a tough time sticking to cooking her own meals and eats out a lot. As long as she comes under-budget for her food costs over that month (or three months), then the system works. The cost of each individual meal is irrelevant.
Cerf acknowledged the method takes some getting used to, but he encouraged people to think like a scientist and experiment with different timescales.
The method comes from neuroscience research showing decision-making can be exhausting. Each day, adults make tens of thousands of decisions, about 200 of which involve food alone. Cerf has claimed the best way to maximize happiness is to make smarter high-level decisions that eliminate the need for smaller decisions. (It’s for precisely this reason that Cerf always orders the second dish on a restaurant’s list of specials.)
One strategy is to be more intentional with who you spend time with. Cerf’s research has shown two people’s brain activity will become more alike when they’re in each other’s presence. The finding suggests that people can more easily reach their goals by spending more time with people already in that circle.
Since money is so often a point of frustration for people, Cerf realized people needed a way to make fewer money-related decisions, too.
Setting a standard timeline for spending money falls under the umbrella of eliminating smaller decisions. Instead of debating whether you can afford something on a daily (or maybe even hourly) basis, Cerf’s suggestion is to figure that all out ahead of time and enjoy living with less financial worry.
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