In 2007 the aver­age Amer­i­can saved 0.6% of their income. By Feb­ru­ary of this year that had risen to more than 4%, but in the 1980s it was 10%.

With this in mind, Tim Har­ford asks why are we such awful savers, and what can we do to improve the situation?

Behav­ioral econ­o­mists […] have uncov­ered three rea­sons why peo­ple find it so dif­fi­cult to save. The first is temp­ta­tion: Although we often later regret it, we just can’t resist spend­ing. The sec­ond is lack of under­stand­ing: Our brains can’t quite grasp the prof­itabil­ity of sav­ing. The third is opti­mism: We believe that every­thing will work out, even if we don’t save.

The solu­tion offered to counter temp­ta­tion sounds very sim­i­lar to the behav­iour Ramit encour­ages in his read­ers:

[Researchers at UCL] found that imag­in­ing a future pur­chase is almost as good as get­ting it. For exam­ple, when we day­dream about buy­ing a new car, our brains respond in much the same way as when we actu­ally make the purchase.

We can har­ness this buzz to our ben­e­fit by dis­card­ing vague ideas of “sav­ing for a rainy day” and focus­ing instead on par­tic­u­lar items we need or want. […] Rein­force this con­nec­tion in your mind by open­ing a dif­fer­ent sav­ings account devoted to each of your goals: one for a new car, one for a vaca­tion, one for a child’s col­lege tuition fees.