Bookmark at social bookmark:   
                                

It is common knowledge that Americans don’t save. Instead, they spend every penny they can get their hands on and more. Personal debt is at record levels and the US current-account deficit has become one of the most discussed subjects in the economic world.  But we rarely ask why it is that Americans won’t save money. They know, just as we all do, that if they don’t save they’re going to have horrible retirements, and they know that those retirements are getting closer and closer. But will they put a penny away? They will not. A recent survey of workers done by the University of Pennsylvania found that while 68% of people admitted to saving too little, only 24% said they intended to save more, and only 3% actually did so within four months.

So what’s going on? Nothing that hasn’t gone on for ever, according to The New York Times. A new piece of research out from Princeton’s Centre for the study of the brain shows that we are hardwired to procrastinate. Decisions are made in two areas of the brain. The first is the lateral prefrontal cortex, a sophisticated system that evaluates trade-offs between abstract rewards. The second is the more primitive limbic system, which is designed to respond to immediate stimuli, and it is this that we use when making our immediate decisions. Unfortunately, this more primitive brain system is prone to giving the immediate future more weight than it is rationally due. The result? The prefrontal cortex tells us to save so we can spend our retirements yachting around the Bahamas, but when the time comes to actually do it, the limbic system tells us to buy a nice pair of shoes instead.

(Article continues below)

Most of us give the matter little thought, but these days, whether you are applying for a mortgage, a personal loan, or just a store card, you will be leaving w

It is more than a month since the Bank of England raised the base rate by a quarter of a percentage point to 4.75%, but most big banks are yet to pass on the ri

Knock-Knock-Knock Who's there? The IRS! The next quarterly payment of estimated income tax for the self-employed is not far off. Network marketers who receive a

If you are a Small Business Owner or Self-Employed Person, there's one especially lucrative tax break that not only puts money in your pocket, it also makes the

Most buyers are diligent about finding a home to buy, negotiating a good price, securing the best mortgage possible and making sure the property is thoroughly i