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When Deciding How Much of Your Salary to Set Aside for Investing, Think Big

Big Bucks! No Whammy!”
–Countless Press Your Luck contestants

If you work for a company that provides a 401k program, then you’re familiar with the session where they teach you about the 401k, tell you about investment choices, and then have you fill out a form to say how much you’re going to contribute to the 401k.

If you have an IRA, you have to decide how much to put into it each year.

If you’re maxing out those investments and still have excess money, you have to decide how much you’re going to save versus how much you’re going to spend.

Do you want to hack your brain and convince yourself to save a little more?

The Simple Trick to Save a Little More

Simple Trick to Save a Little More

Before you go into that 401k briefing or before you decide how much to put into your IRA or invest in other accounts, do one simple thing.

Think of the number one billion.


One billion. All 9 zeroes of it.

Two zeroes short of the Dr. Evil number.

Why think of such a big number?

As research from Duke’s Dan Ariely and others shows, we are susceptible to becoming anchored to numbers, even when the numbers are completely arbitrary. Ariely’s team conducted an experiment where people bid on bottles of wine. Before they bid on the bottles of wine, they wrote down the last two numbers of their Social Security numbers.

Even though the last two numbers of a Social Security number are completely unrelated to the price or value of a bottle of wine, the people who had high Social Security numbers had above average bids, and the people who had low Social Security numbers had below average bids.

To further prove that we anchor ourselves to arbitrary numbers in a variety of financial and purchasing situations, MIT’s Nathan Fong and others performed a series of experiments outside of the classroom in multiple scenarios. The findings still held.

In short, it doesn’t matter where you are or what you’re doing, if you are about to spend money and you are exposed to a number, no matter how random, you’re going to become anchored to that number.

The reason for this is that Monkey Brain, as I call your limbic system, likes the easy way out when it comes to thinking about math and numbers.

As Daniel Kahneman explains in the book Thinking, Fast and Slow (#aff), Monkey Brain leverages System 1 thinking – fast thought. For example, if I posed the following question:

A bat and a ball cost $1.10, and the bat costs $1 more than the ball. How much does the ball cost?

Monkey Brain will blurt out the answer before you can even blink.


He thinks it’s $0.10. It’s intuitive, appealing, and incorrect, but seeing $1 and $1.10 will lead him to think $0.10.

Even if you know the answer, you can’t help but to be drawn to $0.10 as the answer.

That’s how strong Monkey Brain’s pull is when it comes to taking the easy way out when you think of math problems.

So, if he’s going to take the easy way out, give him a path that’s beneficial to you as well.

One billion dollars.

How much of your income are you going to save over the next year?

Author Profile

John Davis
John Davis is a nationally recognized expert on credit reporting, credit scoring, and identity theft. He has written four books about his expertise in the field and has been featured extensively in numerous media outlets such as The Wall Street Journal, The Washington Post, CNN, CBS News, CNBC, Fox Business, and many more. With over 20 years of experience helping consumers understand their credit and identity protection rights, John is passionate about empowering people to take control of their finances. He works with financial institutions to develop consumer-friendly policies that promote financial literacy and responsible borrowing habits.

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