Mind Over Money

In tough times, psyching yourself up to save is even more important. Here's how.

• Budgeting
• Ways to Save

"But I can't save any money." It's an excuse I hear a lot. Sometimes it's a whine. Other times I detect a note of defiance. In the past few years, it has become increasingly frequent, as more and more Americans make less than we spend, eating up the equity in our homes, borrowing from our 401(k)s. The national savings rate is declining. And the situation seems to be getting worse.

The question is: Why? Why don't Americans make saving a priority? We certainly know that saving money -- like eating broccoli and strengthening our core muscles-is good for us. In the latter cases, we listen. Yoga and Pilates have never been hotter. And broccoli now comes as a baby vegetable, precut and bagged, and even in purple. Yet saving for tomorrow is still a largely ignored and unappreciated skill. There are three reasons for this.

One: Saving today is harder. "We've had an income transfer away from the middle class," says Anthony Pratkanis, a psychology professor at the University of California, Santa Cruz, who specializes in financial issues. The typical household income has held largely steady around the mid-$40,000 range for a good half decade, he points out, while prices have continued to rise. "If you're having to spend a disproportionate amount of income on food and gas, it's hard to save."

Two: Credit became too accessible. For years it was simply too easy to get your hands on money to spend. While banks at one time would not let you spend more than 36 percent of your total income on debt (including mortgage), they stretched that number to 55 percent during the housing boom. Why save when you could get that big flat-screen TV today -- just like the one the neighbors installed -- and pay for it with mortgage debt that was both cheap and deductible?

Three -- and most intriguing: Saving is, was, and always will be no fun. "Saving money," explains Jason Zweig, author of Your Money and Your Brain, "doesn't feel good." Think about it this way: Choosing to save almost always means opting for delayed gratification instead of immediate gratification. "You can buy a pair of shoes today," says Zweig, "or have a nice retirement 20 years from now." You can go out to dinner now or put the money into an emergency fund in case the car's transmission goes out -- someday. You're going to buy the shoes or head to the restaurant because the pleasure of getting something good today is much greater than the pleasure of getting something good years in the future -- even if the reward in the future is bigger.

If it's not shoes that make you go mushy inside, it may be technology, or rare books. But that's not only an intensity you feel, it's an intensity neuroeconomists can see. In recent years, this relatively new breed of experts in economics and neuroscience have started using MRIs to view the brain as it is making money choices. When something we want to buy comes into view, they see the pleasure center firing up as we get a feel-good dopamine rush. Similarly, getting a few dollars today is thrilling -- more thrilling, in fact, than getting a slightly larger profit tomorrow. And if you have to wait a few weeks or months for that gain, it will have to be much bigger in order to arouse the same interest in your brain. Things way off in the future -- like retirement -- don't jostle the pleasure center much at all.

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My co-worker was being let go due to a nasty habit she had of not always showing up for work. As an officer in our union, I was preparing to argue on her behalf when she took matters into her own hands and insisted, "But I was really sick this time."

-- Cina K. Manu