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Present Bias and How it Affects The Way We Deal With Debt

Our brains tend to focus on the now and instant gratification. This is called “present bias”. This is one of the reasons why getting into debt is so easy and getting out of debt or saving is so tough.

Credit providers are all too aware of this and are very happy to offer us credit so we can have something now and pay later. These days almost every large shop has to offer credit just to stay relevant compared to their competitors.

I Want it Now

Our brains are very happy to focus on the benefits of having something now (even if that benefit is just that it makes us feel nice). What we often struggle with is waiting. This is something that the commercial system around us is training us to do more and more these days.

‘Researchers say that we don’t actually feel any connection to our future self’

Researchers say that we don’t actually feel any connection to our future self. We often treat our future self as a total stranger who will have to deal with their situation when it comes along. This is why we will regularly make choices now that are hurtful to us later.


The days of waiting 20 minutes for a meal are long gone and if we have to wait more than a minute or two at McDonald’s for our food we start to get anxious. We have places to go and things to do.  Websites that do online sales (and even companies that offer debt review) know that each time you ask a consumer to do one more thing before paying you will see people lose attention and walk away. The objective then of most sites is to make buying easy and simple, with as few steps between choosing your product and paying for it. Researchers have even shown that websites that do sales will lose a lot of business for every second of delay in showing the next image or webpage.

Can We Retrain our Brains?

If we have slowly been trained over the years to want it and want it now then is it possible to reverse the process? Can we train ourselves to wait?

It is possible but we have to actively spend time concentrating on the benefits that we will gain. This mental exercise needs to be done regularly and needs to be specific. On the other side of the coin, we also need to focus on the possible negative consequences of the choices we make. Simply delaying any major purchase decision by 24hours can make a significant difference in what we eventually decide to spend. Try it and see how it changes the way you shop.

‘Simply delaying any major purchase decision by 24hours can make a significant difference in what we eventually decide to spend’

Get Specific

If you want to save money then it has also been shown that saving for very specific things is more likely to succeed than general saving. Rather than save a set amount each month towards no specific goal people who save one amount for their holiday, one amount for their kids’ education and another specific amount for vehicle repairs are more likely to actually save. Many banks recognise this and now allow consumers to create ‘savings pockets’ and even label them.

Another way to deal with this present bias is to put ourselves into the situation now where we have already committed ourselves in the future. For example, you might decide to get help with your debt from a Debt Counsellor. This person then starts things rolling for us. This essentially then forces us into behaving in the future. True, we may not be happy with the situation and even with our past selves down the line but it will be for our benefit. This is similar to asking a personal trainer to help us stay focused on our future fitness goals.

Step one is just to be aware that we have this process going on in our brains and to realise that credit providers and others are taking advantage of the situation. The next step is to decide if we want to actually do something about it. And right about now you are thinking that is a problem for future you…