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ALEX KORB: A lot of times, when we save money we mostly focus on what we are missing out on right now. We're thinking of it as denying ourselves.

NARRATOR: Saving money often feels like we're just throwing our money away. Why save for the future, when there's so much we want to do right now?

ALEX: And so for a lot of us thinking about retirement is stressful. And to avoid that stress, we just don't think about it and that prevents us from doing the things that are in our long-term best interest. What is more important? Your happiness right at this instant? Or your happiness an hour from now or a day from now or ten years from now? And one of the difficulties and challenges with that is that there isn't a correct answer.

NARRATOR: If there isn't a correct answer, how do we figure out the choice that's right for us? Is there anything in our brains that can give us a clue? This is Your Brain on Money. This is Alex Korb, author of The Upward Spiral and he's going to tell you everything that he's learned about the brain.

ALEX: Yeah, so I'll just explain to you very briefly everything that I've learned in the last 20 years of studying the brain. Uh, so there are millions of, you know different little regions of the brain and science has sort of simplified that down to you know, dozens that we can sort of wrap our heads around but the ones that I think are the most interesting and the most important have to do with the thinking and the habit and reward circuits and how those interact.

You can sort of think of these different brain regions as like different types of friends. Your prefrontal cortex, the thinking part of the brain, is saying "Hey, let's do it this way because that's gonna get us to where we're trying to go." And then the habit circuit in the brain says "Well, no, let's do it this way because this is the way we've always done it and that's more comfortable." And the reward center of the brain says "Oh, look there's a cookie!' The human brain just has certain tendencies. Like, we're always gonna pay more attention to things that are immediate, right now.

NARRATOR: This is how the brain's evolved over millions of years. We have a bias for the short term. 10 bucks today is more tangible than 100 bucks a year from now.

ALEX: In order to, sort of, be happy over time you have to find the right balance of like, how much money should I spend now to enjoy living my life, versus how much should I save to plan ahead so that I can enjoy it later? And there are ways to, sort of, influence the system one way or the other.

There's a really cool study where when they had people sign up for their retirement benefits they included like a digitally aged picture of yourself so that when you looked at it it was a little bit more concrete of the idea of like, "Oh, I am going to become that person, like that is me that I am saving for."Most of us have this abstract idea of retirement so it doesn't like feel real or tangible. You can make these future visions of retirement feel more concrete by imagining them in more detail.

NARRATOR: Imagine you're not just putting money into an account, you're putting money toward that brownstone or that vacation on the lake. The more you can imagine it the more motivated you'll be to realize it.

ALEX: One of the keys to being sustainably happy is really just understanding yourself better so that you can make choices that are best for you and your circumstances, and understanding your brain can be a big part of that.

NARRATOR: If we understand how our brains influence us to make certain decisions we can work to overcome these biases. When it comes to retirement the good news is we can start small.

ALEX: Saving $1 a day is infinitely better than saving $0 per day. And so just take one little step in the next direction and then, you know, a year from now "Ah ok, I could up that to $200 a month and then ok" and revisit it. You don't need to solve all of your problems at once. Making a tiny decision and then realizing it wasn't quite right and then making another tiny decision to go in a different direction and then making another tiny decision. That's, that's what living your life is as opposed to thinking about all these possibilities that I have no control over and sitting there doing nothing. It will feel uncomfortable, but you're doing it because that's the only way to get where you're trying to go.