Does an inner gorilla rule your spending?

REGARDLESS of how much you earn, you can 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.

“We have to make a decision about whether we should spend,” Mr Slade said. “Use the 80/20 rule; 80 per cent of your income towards living and 20 per cent into saving.”

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 the extra muffin when we go for coffee,” he said. “It’s our ability to control our ape that actually leads to better financial decisions.”

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

UniSA behavioural expert and research professor Michelle Baddeley said people risk spending and not worrying about the effects. “We do that because we are not really weighing heavily on what the future consequences might be,” she said. “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.”

Prof Baddeley said consumers needed to be better at looking down the track.

“People are much less likely to resist temptation if they see something that catches their attention,” she said.