Many of us set out with the best intentions to save- whether for emergencies, retirement, travel, or that brand-new car- but all too often, we find ourselves having spent our whole paycheck and not having saved a cent. It turns out that people are naturally short-sighted when it comes to money, so it is not surprising that so many of us struggle to save.

Temporal Discounting

At the core of this struggle is a well-researched psychological phenomenon called temporal discounting. Temporal discounting is our tendency to value immediate rewards more highly than future ones, even when the future reward is objectively better. In other words, we “discount” the value of something if we don’t have immediate access to it. Question: would you rather be given $50 today or $60 in a month? Most people would opt for the $50. Our brains see the $60 as less valuable simply because the time we would receive it is further away. This bias can explain many of our daily predicaments.

Why is it so hard to resist dessert while dieting, even though the long-term gain is improved health? Why do we splurge now rather than save for later? Part of the answer lies in our evolutionary past. Our brains have evolved to prioritize short-term gain because survival used to rely on immediate action (such as hunting for food). Our survival, and therefore our future, depended on it. More interestingly, our brains do not devalue time rationally or linearly. Instead, we engage in what researchers call hyperbolic discounting, which means we apply steeper discounts to rewards closer in time. Our preferences shift depending on how far into the future those rewards are. Another question: would you rather have $60 in two months or $70 in three months? In this scenario, people would likely wait for the larger reward when both options are in the distant future. Our preferences are time-dependent, which can make long-term planning so difficult.

The Intersection Between Our Emotions and Our Valuation of Immediate vs Future Rewards

As discussed in previous posts, emotions are not just fleeting feelings. They influence virtually every domain of human psychology, so, of course, they play a critical role in how we value immediate versus delayed rewards. When we experience negative emotions like stress, sadness, or anger, we tend to become more impulsive and short-sighted with our decisions, including financial ones. Studies have shown that individuals in negative emotional states often display higher temporal discounting, which means they prefer immediate rewards over delayed ones more strongly than people in positive or neutral moods. One study found that inducing sadness in participants increased their impatience, prompting what researchers called a “myopic focus” on getting money immediately rather than waiting for a larger reward [1]. When we experience negative emotions, we often seek quick relief- like retail therapy- to make us feel better. While these actions can soothe discomfort momentarily, they can lead to regret and reinforce the vicious cycle of seeking short-term comfort over long-term well-being.

We know that when we feel bad, we can make hasty decisions with our money. The more interesting question is, why do bad feelings make us short-sighted? One reason could be that your future self feels more abstract or less real. How often have you heard the phrase “you only live once” to justify spontaneous spending? Many people struggle to prioritize future goals because they can feel distant and uncertain. When the future is hard to picture, saving for it feels less meaningful, but what if we could make our future selves feel more real? A study tried to do just that by using immersive virtual reality to show participants aged versions of themselves. They found that when people were exposed to this future (and more wrinkly) rendering of themselves, they were more likely to allocate money to a hypothetical retirement account [2]. So, when we can literally see the older version of ourselves, we may feel more empathy and a stronger sense of continuity, which, in turn, may boost our motivation to plan for the future.

How to Trick Your Brain Into Saving

How can you save money when your brain seemingly resists every step of the way? You don’t need more willpower; you need a better behavioural design. Here are a few evidence-based strategies to outsmart your brain and support your future self:

1. Automate It

Set up automatic transfers to a savings account right after payday. You’re less likely to miss the money if you never “see” the money. A common misconception is that if you can’t stash away $100 every payday, then it’s not worth saving at all. Every bit counts whether you save $1, $10, or $100. Small amounts can add up faster than expected, helping you build your savings over time.

2. Make the Future Feel Real

Try using tools that help you visualize your future self. Age-progression apps, writing letters to your future self, or even reminding yourself of your goals can help the future feel closer and more salient.

3. Practice Gratitude

It sounds cheesy, but it’s surprisingly powerful. Studies have found that gratitude is an especially effective emotion in reducing economic impatience. One study instructed participants to recall past personal experiences (i.e., autobiographical memories) that made them feel grateful, happy, or neutral (e.g., recalling the general events from today). Those who reflected on moments that induced feelings of gratitude or appreciation evidenced greater patience (i.e., less temporal discounting) and were more likely to accept a larger, delayed monetary reward [3].

Saving isn’t just a financial decision; it’s a psychological one. Temporal discounting, emotional states, and our perception of the future all influence our choices. The more we understand and appreciate these hidden influences, the more control we can exert over our habits.