Saving money is easy to talk about, but much more difficult in practice. Check out this video on three psychological tricks you can use to painlessly boost your financial well-being — and save more for the future in the process.
We all know that saving is important and is something that we should be doing. And yet, overall, we’re doing less and less of it.
We know what we need to do. The question is: How do we do it? And that’s what I’m here to teach you.
Your savings behavior isn’t a question of how smart you are or how much willpower you have. The amount we save depends on the environmental cues around us. Let me give you an example.
We ran a study in which, in one group, we showed people their income on a monthly basis. In another group, we showed people their income on a weekly basis. And what we found was that people who saw their income on a weekly basis were able to budget better throughout the month. Now, it’s important to know that we didn’t change how much money people were receiving, we just changed the environment in which they understood their income. And environmental cues like this have an impact.
So, I’m not going to share tricks with you that you already know. I’m not going to tell you how to open up a savings account or how to start saving for your retirement. What I am going to share with you is how to bridge this gap from your intentions to save and your actions. Are you ready?
Here’s number one: harness the power of pre-commitment. Fundamentally, we think about ourselves in two different ways: our present self and our future self. In the future, we’re perfect. In the future, we’re going to save for retirement, we’re going to lose weight, we’re going to call our parents more. But we oftentimes forget that our future self is exactly the same person as our present self. We know that one of the best times to save is when you get your tax return.
So, we tried an A/B test. In the first group, we texted people in early February, hopefully before they even filed for their taxes. And we asked them, “If you get a tax refund, what percentage would you like to save?” Now this is a really hard question. They didn’t know if they would receive a tax refund or how much. But we asked the question anyway. In the second group, we asked people right after they received their refund, “What percentage would you like to save?”
Now, here’s what happened. In that second condition, when people just received their tax refund, they wanted to save about 17 percent of their tax refund. But in the condition when we asked people before they even filed their taxes, savings rates increased from 17 percent to 27 percent when we asked in February. Why? Because you’re committing for your future self, and of course your future self can save 27 percent. These large changes in savings behavior came from the fact that we changed the decision-making environment. We want you to be able to harness that same power. So, take a moment and think about the ways in which you can sign up your future self for something that you know today will be a little bit hard. Sign up for an app that lets you make savings decisions in advance. The trick is, you have to have that binding contract.
Number two: use transition moments to your advantage. We did an experiment with a website that helps older adults share their housing. We ran two ads on social media, targeted to the same population of 64-year-olds. In one group, we said, “Hey, you’re getting older. Are you ready for retirement? House sharing can help.” In the second group, we got a little bit more specific and said, “You’re 64 turning 65. Are you ready for retirement? House sharing can help.” What we’re doing in that second group is highlighting that a transition is happening.
All of a sudden, we saw click-through rates, and ultimately sign-up rates, increase when we highlight that. In psychology, we call this the “fresh start effect.” Whether it’s the start of a new year or even a new season, your motivation to act increases. So right now, put a meeting request on your calendar for the day before your next birthday. Identify the one financial thing you most want to do. And commit yourself to it.
The third and final trick: get a handle on small, frequent purchases. We’ve run a few different studies and found that the number one purchase people say they regret, after bank fees, is eating out. It’s a frequent purchase we make almost every day, and it’s death by a thousand cuts. A coffee here, a burrito there … It adds up and decreases our ability to save.
Back when I lived in New York City, I looked at my expenses and saw that I spent over 2,000 dollars on ride-sharing apps. It was more than my New York City rent. I vowed to make a change. And the next month, I spent 2,000 dollars again — no change, because the information alone didn’t change my behavior. I didn’t change my environment.
So now that I was 4,000 dollars in the hole, I did two things. The first is that I unlinked my credit card from my car-sharing apps. Instead, I linked a debit card that only had 300 dollars a month. If I needed more, I had to go through the whole process of adding a new card, and we know that every click, every barrier, changes our behavior.
We aren’t machines. We don’t carry around an abacus every day, adding up what we’re spending, in comparison to what we wanted. But what our brains are very good at is counting up the number of times we’ve done something. So, I gave myself a limit. I can only use ride-sharing apps three times a week. It forced me to ration my travels. I got a handle on my car-sharing expenses to the benefit of my husband, because of the environmental changes that I did. So, get a handle on whatever that purchase is for you, and change your environment to make it harder to do so.
Those are my tips for you. But I want you to remember one thing. As human beings, we can be irrational when it comes to saving and spending and budgeting. But luckily, we know this about ourselves, and we can predict how we’ll act under certain environments. Let’s do that with saving. Let’s change our environment to help our future selves.
I’ve been in the entertainment industry for over 30 years. I was a very light drinker in my 20s. In my 30s, I was a social drinker, and somewhere in my early 40s, I developed alcohol use disorder, which is abbreviated AUD.
We don’t really use the term alcoholism that much anymore, because it’s too narrow of a term. AUD covers everything from the occasional binge drinker to the chronic daily drinker. I started to realize that something was very wrong with me when I was always the last person standing at the bar or at dinner parties when everybody else had switched to coffee, I was still quaffing wine. Yeah.
I realized then that I definitely had a problem, so I decided that I would just go cold turkey, sober, and I did. But what I didn’t realize is that could cause what’s called the alcohol deprivation effect, where once the honeymoon period of sobriety wears off, you’re left with constant physical cravings for alcohol. Think about it. You drive by a liquor store, and you’re triggered, you want a drink. You walk by a pub, and you get angry because you can’t go in there and have just one drink. You start isolating from your friends and families because they drink.
Developing AUD was an incredibly confusing thing for somebody who, admittedly, likes to be in control. I was definitely not in control of this at all. In fact, I was swept up in a nearly decade long battle with something I refer to as “the monster.” Addiction is a monster, and it affects every ethnicity, social class, race, sex, age; it doesn’t matter. You can be the most disciplined person in the world … when it gets you, it has you. “It” is in control. When I finally realized that I was not in the driver’s seat, that the monster was, I sought out every single treatment I could possibly find or afford.
I went to rehab for $30,000 to basically drink wheat grass and do tai chi. I went to talk therapy for over two-and-a-half years for 200 bucks a session. I actually sought out a hypnotherapist who claimed that he had cured a member of the Grateful Dead – that was 400 bucks an hour. I went to 12 different meetings of AA in two different countries. I went macrobiotic. I got my chakras realigned. I tried veganism. You name it, I tried it, and I – I prayed. I prayed until my knees were black and blue, and I still kept relapsing, time and time again. I mean, I think that in the years that I was suffering from AUD and really battling it, I probably relapsed close to 20 times. And each relapse became more difficult to recover from, and they got worse and worse and worse.
And here’s the thing: I wasn’t drinking because I had a crummy childhood, or because I was suffering from any personal trauma. I mean, if you look at it from the outside, I had a great life! I was in my chosen career. I had a beautiful home. I had friends and family who loved me and supported me. I was drinking because I was physically addicted to alcohol. That’s it. Once I started, I could not stop drinking. I have addiction on both sides of my family, and the genetic predisposition coupled with engaging in the behavior, which for me is drinking, made me an addict.
I knew one thing for sure after trying all of these treatments, and this became very clear: doing equine therapy or tai chi in some swanky beachfront expensive rehabilitation facility was not going to fix my biological addiction. By the end of 2008, I had six months of sobriety under my belt, and that’s when the addict started to talk to me in my head.
That’s the insidious thing about addiction, is once you have a bit of sobriety under your belt, you go, “Hey, I’m not an addict.” It whispers to you, “Go ahead, have a drink. You’ll be able to control it. Just one drink.” So I listened to that idiot in my head, and I went out to dinner that night, and I had a glass of wine, came home, and I was so chuffed, “Well, look, the idiot is right. I’m not an addict. I only had one glass.” Right …
Day 2, I had two glasses; day 3, I had three glasses – plus I picked up a bottle to bring home and drink on the way home. Day 5, I was in a full-blown binge; I was drinking anything and everything, I would have probably drunk vanilla extract if I had it. When I was finally too ill to drink one more drop of alcohol, I did what I always did: went cold turkey and tried to detox. This time, something went very wrong. I started to suffer from seizures in my body. I lost all control of my motor controls. I couldn’t stand up; I couldn’t get dressed.
So I called a friend, and she took me to my one and only medical detox. Where, I got to tell you, I was not treated very well. In fact – until they had my $3,000 – they finally gave me my medication that I needed to stop shaking. At that point, I felt so humiliated and so down and so embarrassed by the whole experience that I checked myself out and I left. On the way out, there was this little stack of flyers for all these different various treatments for AUD. One of them was for a shot, and this shot promised to eliminate all cravings for alcohol. The shot was over $1,000 a month, but at this point, I would have sold my soul to get better. When I got home, I Googled that shot. It turns out that the main ingredient in it is Naltrexone, an FDA approved, non-addictive, safe medication that’s been used to treat AUD since 1994.
As I was searching, a book popped up: the rather boldly named The Cure for Alcoholism, by Dr. Roy Eskapa. And there was this little sample chapter, so I read the chapter, and I was absolutely hooked. This made complete sense to the science lover in my head. It described a treatment called The Sinclair Method, or TSM, where one takes an opiate blocker, you wait for an hour so the medication can get into your bloodstream and brain, and then you drink alcohol.
Sounds counterintuitive, I know, but hear me out. Usually when an addict drinks, they get a huge reward from alcohol, and that’s what makes them want more and more and more. But if you drink an opiate blocker, like Naltrexone, or Nalmefene if you’re here in the UK, instead of the alcohol reinforcing the addictive synapses in the brain, the opiate blocker blocks the endorphins from activating the part of the brain responsible for addiction. It’s as if you have a huge room of endorphins living in your brain? And every time you drink alcohol, those endorphins rush through the door, and they raise hell in your brain and your neuro pathways. The opiate blocker stops those endorphins from even leaving the room. It slams that door, and it locks it, so they can’t even get out and play.
Over the course of a couple days, or weeks for some people, the body is slowly detoxed, drinking levels dramatically decrease because your cravings for alcohol subside. I didn’t have a doctor that would prescribe me Naltrexone back then; in fact, when I mentioned it to anybody, they said, “What?” So I ordered my pills from an Indian pharmacy online, 50 mg of hope. Took a couple of weeks for the pills to come to me, and when they did, I got to tell you I was scared out of my mind because I thought, “What if it doesn’t work? What if it makes me relapse again? What if it’s a worse relapse than the last one?” But at this point, I was so desperate – I took my chance.
So I took the pill; I waited the hour; I poured myself a glass of wine, and it was a miracle. I mean, the wine just sat there while I ate my dinner. There was no head games, no compulsion, no “I want more, more, more” – nothing. I took a couple of sips, and I went, “Meh. I’m done.” It was a complete miracle. Three months into TSM, I had my true aha moment. There was this billboard – I hate this billboard – near where I lived in Los Angeles, and every time I drove by it, it had a huge glass of red wine on it, which was my particular poison, massive glass of red wine, every time I drove by that billboard, it would trigger me. If I was in drink mode, it would trigger me, I’d go, “I want more.” If I was in sober mode, I would drive by that billboard, and I’d go, “Uh, damn it, I can’t have a glass of wine.” This particular day, I drove by that billboard, and my brain said to me, “That’s just a billboard.” I can’t even explain to you what a profound moment this was, because it meant that my thought processes were normal again. It meant that my brain was fixed. It meant that I was me again.
Six months into TSM I was mostly sober, except for the occasional planned drink one hour after taking Naltrexone. TSM worked so well for me that I decided to contact Dr. Roy Eskapa and thank him for writing his book. I also asked him to thank American researcher Dr. David Sinclair, whose life’s work, quite literally, saved my life. I asked him, “What can I do to help spread the word about this treatment?” He said, “Well, why don’t you write a book?” So I did. That’s when my journey of discovery really began. I found out that the World Health Organization estimates that a person dies – 3.3 million people die every single year from alcohol-related causes. That’s more than malaria, tuberculosis, AIDS. I also found out that multiple researchers estimate that 80 – 90% of people suffering from AUD do not seek treatment, and many of these people don’t seek treatment because they’ve been falsely led to believe that they have to give up alcohol for the rest of their lives, which to a 20- or 30-year-old can be utterly daunting, not to mention kind of unrealistic. I also found out that of the 10% who do seek treatment, up to 90% of those people are relapsing within the first four years! I mean, what other treatable disease can you think of that has this abysmal of a success rate?
Studies show that tough love and humiliating an addict, or making them hit rock bottom is not helping them; it’s actually making people worse. As Dr. Keith Humphreys from Stanford University said, “It’s remarkable that people believe what’s needed is more punishment. If punishment worked, there wouldn’t be any addiction. It’s a punishing enough experience.” He is absolutely right. It is punishing. If we addicts had a normal disease, we would be treated with sympathy and comfort; instead, we’re faced with a barrage of “Why can’t you just quit? Just say no,” and a complete lack of understanding or compassion. Many people suffer for much longer than I did, but the majority of us suffer for about a decade before finding help. So, why do so many people believe that a long-term battle with alcohol addiction can be simply stopped in 30 days or less with nothing but talk therapy and willpower? It’s amazing. It’s amazing.
The World Health Institute estimates that a person dies every ten seconds from alcohol use disorder. Is our current treatment system really the best we can do? The Sinclair Method has a 78% long-term success rate. Imagine a world with 78% less alcohol addicted people. Imagine the profound impact that would have on our society. 78% less broken families. 78% less abused children, lost days of work, insurance costs, accidents, and on and on and on. The Sinclair Method uses science to empower your friends, your family, or even yourself to achieve recovery. Thanks to the Sinclair Method, I was able to Ctrl-Alt-Del my addiction to alcohol. I am no longer powerless. The monster is no longer in control.
I am. TSM works wonders for alcohol-addicted people. It is my dream to see it become a go-to, regularly offered treatment for those in need. I encourage all of you, I beg you to please help spread the word of this lifesaving treatment. And let’s give addicts the option they deserve. Thank you very much.
