The Psychology of Money-How Saving and Spending Habits are Programmed in Your Brain By Suzanne Kearns Have you ever wondered why you handle money the way you do?Perhaps you're a saver and you feel satisfaction every time you look at your growing account balances and displeasure when you need to buy something.Or maybe you're a compulsive shopaholic,looking at life as something to enjoy,so you buy on impulse and pay little attention to how you'll survive in the future. While many people believe that money-handling habits come from parents or caregivers,current research is proving that our habits aren't just based on conditioning and money management lessons we learned as kids.There are spenders and savers in the same families,kids who grew up in poverty and still develop great wealth,and heirs who blow the family fortune. If it's not how you're brought up,what does shape the way you view money?Experts are revealing that brain chemistry plays an enormous role in your financial habits. Brain Activity In a study conducted by Rick,Cyder,and Loewenstein published in the Journal of Consumer Research,participants'brains were scanned as they pretended to make buying decisions.Researchers observed activity in an area of the brain called the insula,which is stimulated when you experience something unpleasant.The more stimulation in the insula,the less likely you are to keep doing what you're doing. When it comes to money,insula stimulation can stop your spending. On the other hand,the act of saving -either by having cash in a bank or by experiencing a significant savings on a product or service-brings savers intense pleasure.The victory of a good bargain makes everyone feel good,but savers feel the rush even more since it's a relief from the discomfort of needing to spend. Meir Statman,a behavioral economist at Santa Clara University uses this analogy:If you go out to eat at a restaurant that typically charges $70 for a plate and you get your meal for only $7,it will taste better to you.But if you ate at that same restaurant without knowing the cost,you wouldn't enjoy your food as much.Knowing the total amount saved gives savers immense pleasure. Researchers concluded that people who have more insula activity in their brains are more likely to be savers,and those with less tend to be spenders.And since we tend to skew to extremes,spenders can end up in financial trouble later in life,and savers can end up with great regrets.Recognizing which one you are can help you reach a healthier balance. The Spenders In an early experiment on children,commonly called the marshmallow experiment of the '60s,researchers at Stanford presented nursery school children with a tray of goodies that contained marshmallows,pretzels,and cookies.Researchers told the kids to select one treat,and that if they ate it immediately,they wouldn't receive any more,The Psychology of Money – How Saving and Spending Habits are Programmed in Your Brain By Suzanne Kearns Have you ever wondered why you handle money the way you do? Perhaps you’re a saver and you feel satisfaction every time you look at your growing account balances and displeasure when you need to buy something. Or maybe you’re a compulsive shopaholic, looking at life as something to enjoy, so you buy on impulse and pay little attention to how you’ll survive in the future. While many people believe that money-handling habits come from parents or caregivers, current research is proving that our habits aren’t just based on conditioning and money management lessons we learned as kids. There are spenders and savers in the same families, kids who grew up in poverty and still develop great wealth, and heirs who blow the family fortune. If it’s not how you’re brought up, what does shape the way you view money? Experts are revealing that brain chemistry plays an enormous role in your financial habits. Brain Activity In a study conducted by Rick, Cyder, and Loewenstein published in the Journal of Consumer Research, participants’ brains were scanned as they pretended to make buying decisions. Researchers observed activity in an area of the brain called the insula, which is stimulated when you experience something unpleasant. The more stimulation in the insula, the less likely you are to keep doing what you’re doing. When it comes to money, insula stimulation can stop your spending. On the other hand, the act of saving – either by having cash in a bank or by experiencing a significant savings on a product or service – brings savers intense pleasure. The victory of a good bargain makes everyone feel good, but savers feel the rush even more since it’s a relief from the discomfort of needing to spend. Meir Statman, a behavioral economist at Santa Clara University uses this analogy: If you go out to eat at a restaurant that typically charges $70 for a plate and you get your meal for only $7, it will taste better to you. But if you ate at that same restaurant without knowing the cost, you wouldn’t enjoy your food as much. Knowing the total amount saved gives savers immense pleasure. Researchers concluded that people who have more insula activity in their brains are more likely to be savers, and those with less tend to be spenders. And since we tend to skew to extremes, spenders can end up in financial trouble later in life, and savers can end up with great regrets. Recognizing which one you are can help you reach a healthier balance. The Spenders In an early experiment on children, commonly called the marshmallow experiment of the ’60s, researchers at Stanford presented nursery school children with a tray of goodies that contained marshmallows, pretzels, and cookies. Researchers told the kids to select one treat, and that if they ate it immediately, they wouldn’t receive any more