My research in psychology, along with 35 years of experience working with people and their finances, suggests that how we handle money is more instinctual than cognitive. It’s more a factor of our brains' hard-wiring than it is learned intelligence. Apparently, some people are just wired to do money well and others are not.
This can sound like a complete cop out. The idea that you either have the money gene or you don’t seems simplistic. Yet, I believe there is some truth to it.
Researcher and educator Russ Hudson finds that two centuries of data suggest every human being has three basic instincts that are necessary for survival: social (for getting along with others), sexual (for extending ourselves through generations), and self-preservation (for maintaining our physical life and functioning).
For most of us, these three are not equally balanced. One tends to be dominant, a second supports the dominant one, and the third and weakest one typically creates a blind spot. The dominant and weakest instincts give us the most trouble.
Evidence supports the idea that those with a dominant instinct of self-preservation tend to instinctually be successful savers. They are the people who find it relatively easy to, in the words of the late Dick Wagner, "Spend less, save more, and don’t do anything stupid."
This doesn’t mean they have a good relationship with money; that they sleep peacefully at night, don’t worry about money, or are not obsessed with money. It doesn’t mean they are happy. But it does mean they tend to be frugal, which is the common denominator of accumulating wealth. They understand instinctually that you can’t spend more than you receive if you are going to thrive and prosper financially. Living life on the edge or focusing on the welfare of others is instinctually foreign to them.
On the other hand, someone with a dominant social or sexual instinct may be living hand to mouth, but be blissfully happy doing so. What's instinctually foreign to them is learning to manage money prudently and take care of themselves financially.
As Jonathan Clements recently wrote in his HumbleDollar blog, "Why is change so difficult? Improving behavior is toughest when it means bucking our hardwired instincts. Intellectually, we may know we should exercise more, lose weight and save more — and yet our instincts keep telling us to stay on the couch, eat Cheez Doodles and shop online." That’s why more financial education or discipline isn’t enough to motivate most Americans toward finding financial wellness.
For those who don't have self-preservation as the dominant instinct, the enormity of learning to practice more self-preserving financial habits can feel depressing and hopeless. Yet it is certainly possible. It just isn’t going to be easy.
One approach that may be helpful is to get assistance and support from others. Clements says he has come to believe the best thing to do is tell friends about your financial goals like saving money for a down payment on a home, paying off a debt, or increasing your retirement plan contributions. This can help motivate you to commit to following through.
Announcing an intention to friends with the hope that the shame of not following through will motivate you to create a new behavior may work for a few. Yet for most, it probably won't help to change a hard-wired instinct. A better idea could be finding and reporting regularly to an accountability partner who would kindly, without scolding or shaming, help motivate you to establish a habit. Even better may be engaging a financial therapist to help you with the hard work of cultivating new instinctual behaviors.