Anatomy of the Financially Savvy Brain- Part 1

Anatomy of the Financially Savvy Brain will be a 6 week series that will run every Thursday until April 7/11. The entire series can be found under Money Tips.

Ever wonder what is actually happening inside our brains as we plan our money management strategies, bravely stave off impulse spending , and work towards that end goal of financial freedom? This series will answer those very questions by looking at the seven main processes of the brain and how they effect our money management.

1. Prefrontal Cortex: The prefrontal cortex acts like the CEO of our brains.  This part of the brain is responsible for “executive function.” Executive function includes activities like planning; cognitive flexibility; abstract thinking; rule acquisition; initiating appropriate actions; inhibiting inappropriate actions; and selecting relevant sensory information.

A financially savvy person uses this part of the brain to develop and implement a financial strategy, and to make decisions about timing and feasibility. For example, when you sit down and develop your saving and investment plan for the year, you are engaging this part of your brain. Similarly, when you are considering the pros and cons in a spending decision you are using this part of your brain. Your prefrontal cortex is essentially your decision maker.

This part of the brain also keeps us on track financially. When we are tempted to spend money on an item that we really don’t need, our prefrontal cortex helps us muster up the courage to say “No. That money could go towards (blank).”

You see, your prefrontal cortex, a.k.a. the CEO of your brain, is ultimately responsible for your successes and failures.

So, how do you train your prefrontal cortex to function better? A study done by Dr. Ryuta Kawashima, a professor of neuroscience at Tohoku University, answered this question.

[amazon asin=0141034882&text=Dr. Kawashima] has spent twenty years researching the brain’s functions, using brain imaging devices such as functional MRI to determine when the brain was most stimulated and active. His research found that while writing or reading silently, there is vigorous prefrontal cortex activity in both hemispheres.  However, when reading aloud,  the brain has the most activity.  Therefore, Dr. Kawashima recommends a combination of oral reading and rapid solving of simple arithmetic calculations to train our prefrontal cortex.

So how do I implement this training program into my life you ask? Well here are some activities you can try:

  • When you are out and about try to read all of the billboards and signs you see as quickly as you can.
  • Look around at work and count all of the numbers that you see. Then add, subtract, multiply, divide them until you get an answer of one.
  • Try counting the number of steps you take when you walk.

These above activities are quick and easy and don’t take a lot of time. They can be done once a day or numerous times a day. It just depends on much exercise you want your brain to have.

So, there you have it; the breakdown of the first brain process that plays a role in your financial success.  Stay tuned next week where I discuss the second process, the Amygdala.

So are you going to give your “prefrontal cortex” are workout this week? I hope so.


Anatomy of the Financially Savvy Brain- Part 1 — 13 Comments

    • @ Balance Junkie You’re welcome. I can relate to your headache. I was helping a friend’s kid the other day with math and I had to really rack my brain to figure it out. Can’t believe how much I have forgotten over the years. Oh well, time to fix that I guess.

  1. After attending recently a Qi Gong workshop, I’ve been wondering whether basic energy techniques are being used in the field of finance. For example, bringing attention (energizing) and then intention (organizing energy) to the financial goals (which are by nature complex) in order to make better decisions.
    Analytical thinking is clearly limited (useful but…) and needs to be enhanced. Any thoughts along that direction?

    From this first part of your series, it seems to me that you are implying that we all need to meditate and work on our energy fields to improve brain financial brain function – decision making.

    • @Efi Yes, I agree. Meditation and learning how to control your thoughts and disassociate yourself from them in order to control your actions can be very helpful in managing your finances. The problem is that most people are in such a hurry that they aren’t even aware of what they are thinking let alone controlling their impluses. This is where people get into trouble.

  2. I notice that when I’m problem solving, I often “talk to myself.” I guess, subconsciously, that I was tuning up and working by prefrontal cortex. Thanks for sharing these exercises, I’ll have to try using them this week.

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