Using neural plasticity to get your kids ready for a lifetime of savings

After creating a “backwards bike”, Destin Sandlin’s friends presented him with a “simple” challenge. Ride the bicycle. The trick however was that the controls were reversed, turning the handlebar to the left steered the bicycle right and vice versa. They provided Destin with the requisite knowledge via easy-to-understand instructions to ride the bike, but he could hardly string two complete pedals together. Knowledge does not equal understanding.

?The above example is rather profound and helps us understand that the cerebellum at the back of the brain is responsible for coordination and balance that would be crucial for riding a bike. This is part of the intuitive or automatic brain system. Conscious and deliberate movement however is housed in the cerebrum located in the front of the brain. With the requisite repetition (riding your bike like everyone else) the algorithm becomes entrenched in the cerebellum and even when contrary information is presented to the cerebrum (steer the opposite way), it is difficult to override. Change takes time and high repetition to get to the right place (the cerebellum). This is why knowledge is often difficult to implement and why when you quit a powerful habit like smoking it takes time, energy and a lot of repetition (not smoking) for your instruction to become a new habit.

?How does this relate to saving? One of the fascinating findings of Destin’s experiment came after mastering the backwards bike. Rewiring his cerebellum for the new algorithm took a full 8 months of practice. Destin then offered his 8-year-old son a challenge that was too good to refuse. Master the backwards bike and take a trip to Australia to meet a real astronaut. The result? What took Destin 8 months of practice, wipe-outs and frustration took his son… 2 weeks. See where we’re going with this? Children have neuroplasticity or the ability to change and forge neural pathways easily. They can hardwire habits fast. Make sure saving is one of those habits.

?The question begs, how? The most common engagement your kids have with money is usually via their allowance or pocket money. While the jury is still out on whether or not to sever the link between the allowance and chores financial psychologists mostly agree that there should at least be some strings attached to receiving the allowance. This presents a number of opportunities to learn about money and financial psychologists also agree that using a “bucket approach[1]” is an excellent way to teach four valuable money lessons from an early age.

?Lesson 1: Play. Money can be fun and should be used to have fun. A portion of their allowance should be for spending today on having fun with family and friends.

Lesson 2: Save. A portion of the allowance should be saved. Allowance not enough to buy a hoverboard? Let’s work out together how we can save to get there in the intermediate term. Lessons about delaying gratification (not eating the marshmallow) will prove invaluable in future.

Lesson 3: Invest. This one is all about the future. Teach your kids about making money work for them and the true power of compounding and time. Show how they’re getting interest and that their money is growing and growing.

Lesson 4: Give. It feels good to help others and a portion of your time and money should always be used to help those in need. People and animals alike. ?

?Doing the wrong things is so much more difficult to change as we get older. This is how the brain works. But doing the right things are equally difficult to change so make sure that you’re using neuroplasticity (or the lack thereof) to your advantage and to the advantage of the generation to follow you.

Watch the backwards brain bicycle video here.

[1] Klontz, B., Horwitz, E. and Klontz, T., 2020.?Money Mammoth: Harness the Power of Financial Psychology to Evolve Your Money Mindset, Avoid Extinction, and Crush Your Financial Goals. John Wiley & Sons.

?