As humans we have changed a lot over time. Vast periods of time have seen us adapt and evolve—from hunting for food to ordering online and as our behaviour has changed, our brains have developed.

But even though we no longer live in caves, some of our ancient hardwiring still prevails and designs behaviour. Behavioural science shines a light on the whys and wherefores of human behaviour and shows how, unless we consciously override our hardwiring and put deliberate strategies in place, many of us may pay dearly and live less-than-optimal lives.

We’re hardwired for now

It’s been said that failing to plan is tantamount to planning to fail. And when it comes to financial success, a plan that enables you to enjoy your current lifestyle and reach your longer term goals often means the difference between a comfortable successful life and the opposite. But planning can be an issue for many people.

We discount the future

As scienceⁱ shows, we’re hardwired to act in the present moment with little thought of what tomorrow may bring. We naturally put things off and more than that: we discount the importance of our own futures and fool ourselves into thinking an immediate reward is more valuable than a larger future benefitⁱⁱ.

When we were cave people, acting for the moment made sense. We lived for today and dealt with tomorrow if and when it arrived. In fact, our survival hinged on the ability to act quickly and make the most of the present. Life was unpredictable and, as one example, the threat of available food being taken was easily avoidable—simply act now and eat.

These days, focussing on the moment is something science has shown we are still hardwired to do, but it’s often at the expense of a comfortable future. In this day and age when living day to day or pay cheque to pay cheque can leave us high and dry, our hardwiring is one of the biggest obstacles to effective financial decision making.

It may be part of being human but the implications that discounting the future can have on our own financial lives can be profoundly negative.

We can override our hardwiring

Behavioural science helps us understand how our own behaviour can work against us and set us up to live futures which are unpredictable and unstable. But the insights from behavioural science can also help empower us to make more effective financial decisions.

With an awareness of our hardwired tendency to discount the future and put off important financial decisions we can take a conscious and rational approach and override our natural short-sightedness.

By setting and achieving goals you can promote positive financial behaviour. The act of consciously setting goals can help you imagine your own future more vividly and in turn, help you act more effectively and realistically in your own best interests.

Regularly tracking and reviewing goals can help remind you of your future. It can overpower the subconscious hardwiring that works against the need to plan ahead by reinforcing a logical state of mind.

What you can do

Even if your human hardwiring is presenting challenges for you, you can achieve your goals and be better off.

As the new financial year dawns, give yourself the future you deserve. Don’t give in to the tendency to put things off and come and meet with us so we can chat about putting plans in place—this time next year you could be in a much stronger financial position.

i Thaler, Richard T, (1991). Some Empirical Evidence on Dynamic Inconsistency.
ii Such behavioural science concepts which challenge the assumption of human rationality prevailing in modern economic theory, well documented by experts such as Daniel Kahneman, Israeli-American psychologist noted for his work on the psychology of judgment and decision-making and behavioral economics which he was awarded the 2002 Nobel Memorial Prize in Economic Sciences.