Gorillas impact our money behaviours

Regardless of how much money you earn this is one golden rule to ensure you will always have enough money to get by.

Regardless of how much you earn, it is possible to survive financially if you stick to one golden rule.

Suncorp behavioural economist Phil Slade has delved into what drives us to behave the way we do with our money.

He said people earning high incomes could be among the worst to complain that they had little money left.

“Often we have to make a decision about whether we should or shouldn’t spend, but we need to set up simple rules so it’s not seen as a punishment,” Mr Slade said.

“Use the 80/20 rule, 80 per cent of your income goes towards living and 20 per cent goes into saving.

“I’ve never met anyone who can’t actually live off 80 per cent of their income.”

Experts say Australians should be able to live off 80 per cent of their income.

MORE: Not all Millennials blow their cash

MORE: How to get the best value out of your health insurance

Mr Slade said everyone had a 500kg gorilla that sat on their back and controlled most of their spending.

“It’s our ape that marketers market to, it’s the ape that loves social media and loves the extra muffin when we go for that coffee,” he said.

“It’s our ability to control our ape that actually leads to better financial decisions.

“We all need to rein in our spending at times.”

Mr Slade said one of the best ways to achieve financial goals was to be honest about your spending and share your highs and lows with someone close to you.

This will help keep you on track.

UniSA behavioural expert and research professor Michelle Baddeley said often people ran the risk of spending today and not worrying about the impacts later on.

“If we spend today, such as buy new clothes, we do that because we are not really weighing very heavily on what the future consequences might be,” she said.

“The future is a long way off and there’s a problem called present bias. That means we disproportionately like immediate rewards which makes us not so good at thinking about the future.”

Professor Baddeley said often consumers needed to become better at looking down the track.

“People are much less likely to resist temptation if they see something that’s bright and colourful and engaging and catches their attention,” she said.

@sophieelsworth

Originally published as Gorillas impact our money behaviours