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Influencer Shows How Small Behavioral Changes Can Transform Your Personal Finances.
Millions of Brazilians face the same dilemma every month: the salary comes in and starts to disappear. Credit card payments, piled-up bills, and unplanned expenses leave little or no leftover.
According to data from IBGE, about 72.4% of the population lives in households struggling to pay monthly bills. Only 1% of Brazilian families claim to pay everything with ease.
Why, even knowing the importance of saving money, do so many people struggle to save?
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The answer may lie in the functioning of the human brain itself. According to behavioral economics studies, the brain prefers immediate rewards. This phenomenon is called present bias — or present bias.
Present Bias and the Lazy Brain
Present bias explains why it is more pleasurable to spend now than to wait to reap benefits in the future.
Even knowing that saving R$ 100 today can yield much more later, most prefer the immediate benefit.
Another obstacle is inertia behavior. A study conducted with employees of a company in the United States showed how simple changes can influence financial decisions.
Previously, employees had to actively enroll in the company’s retirement plan. Result: only 37% adhered.
When the company changed the system to automatic enrollment, that number jumped to 86%. The reason? People avoid effort. If something requires decision and action, it is more likely to be ignored.
Avoid Complicated Budgets
Many people believe that the first step to saving is to create a detailed budget.
However, a study involving over 9,000 people showed that the budget format does not matter: on average, everyone spent 30% to 40% above the expected after 13 weeks.
In other words, creating a plan may work at first, but it is hard to maintain over time.
Just like those on a diet who can’t resist a sweet, most people fail to follow a strict budget.
The brain ends up sabotaging the plan, making it necessary to think of more realistic and effective alternatives.
Use Your Brain to Your Advantage
Psychology can also help with saving. One tactic is to use cash instead of a card.
Studies show that spending with physical bills activates an area of the brain related to pain.
Using a card, on the other hand, activates areas linked to pleasure. Even with the same value, the way you pay changes the perception of the expense.
Another technique is to separate money into “mental jars.” In an experiment with workers in India, those who received two envelopes — one for spending and another for saving — saved 72% more than those who received everything in a single envelope.
Having different goals and separate accounts helps create psychological barriers against consumption.
Liquidity Can Hinder
Financial products with immediate redemption are tempting. However, for those who already have an emergency fund, it is wise to avoid high liquidity.
An experiment in the Philippines with 1,700 people showed that those with accounts without immediate redemption ability saved 81% more.
Making access to money difficult can be an effective strategy to avoid impulse spending.
Automate and Forget
Automating is one of the most practical tips. Many banks, like Inter, allow for automatic investment scheduling.
For example, you can set it up to save 5% of your salary as soon as it is deposited in your account. You can also reinvest dividends or schedule monthly contributions to CDBs.
This way, saving happens even without conscious effort.
