#86 How to Save Money According To A Neuroscientist

I read an interesting article yesterday on How to Save Money According To A Neuroscientist.

TLDR. Make smarter high-level spending decisions to eliminate smaller decisions.

In the linked article, the neuroscientist says that each person needs to think about their spending on a daily, weekly, monthly, annual basis. The choice of which time frame to use is up to personal preference but may require some experimentation. From the article:

Someone 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. 

My wife and I are annual spenders. We do all our expense planning once a year and spend freely during the year knowing that we properly budgeted for our expected behaviors of going to coffee shops and eating out on weekends. Some months we spend more and some months we spend less. 

January 1st is an exciting time for me and my wife. It's the new year and that means we get to analyze all the expense data from the previous year. We look at our spending in each category for the past year and create the next years budget. We now have data for 31 categories since 2013 (our first full year together as a couple), these range from Grocery, Restaurant, Clothes, Coffee, Donations, Utilities and more. With nearly 5 years of data, we can reliably trust our budgets to be pretty close to the mark. We actually often come in under budget, which is a great victory for us that we celebrate.


We think ahead in the year of what we hope to do for the year if there are any planned changes in the coming year we make adjustments to our budget for the new year relative to our spending the previous years. If nothing is expected to change (like our phone bills) then we just keep the category the same.

Because we did our high-level spending decisions in January, we eliminate many smaller decisions throughout the year. When my wife says she wants to buy clothes, I tell her "go ahead, we budgeted for it". When I say let's go get Thai for dinner, we don't hesitate because we budgeted for 3-4 restaurant meals a week. And when I want to buy some new books, I still look for the deals, but I don't worry about holding back, because I know I have the budget for it.

Perhaps you don't have a regular income and need to budget on a different scale. This is what the article talks about. Some people work better on a monthly, weekly or even daily budget. Daily seems a little too micro, but like the neuroscientist says, you have to experiment and find what works for you. Starting with an annual budget might be harder for some, so start small with a weekly budget and gradually increase the time frame as you get more comfortable with how consistent you can be with your spending.


Save Money Retire Early is written by Jon Lo, a barely 30 something optimist, and personal finance guy. I believe anyone can be rich or poor, it's what you save that makes the difference.

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