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Save For A Brainy Day

The ability to save money is determined by the side of the brain you think with, it was revealed yesterday.

New research commissioned by first direct found those who gave right-side of the brain responses (typically creative and impulsive types), have a carefree 'live for today' attitude, credit card debts and little or no savings.

But deeper thinkers, who responded using the left-side of the brain – careful and logical types – are far more comfortable managing their finances, it emerged.

The study was carried out at Hertfordshire University by psychologist and author of Sheconomics, Professor Karen Pine.

Professor Pine began the experiment by asking 500 adults a brain-teaser compiled by US-based scientists.

She examined their answers and found that only one in three people got the answer right; these people were 'reflectors' - who think with the left-side of the brain.

Most of the people got the question wrong; these were 'intuitors', people who tend to use the right-side of the brain.

When participants who gave the wrong answer were asked about their money, it was found they had fewer savings, credit card debt and a lax attitude to money management.

Professor Pine, said: ''Reactive people can't suppress the first answer that springs to mind. They're the kind of people who live for the moment and avoid putting effort into anything that doesn't bring short-term gain. This can be linked to poor money management, such as only making the minimum repayment on a credit card.

''Intuitors might feel dissatisfied with their bank, too, but don't change it.

''This is irrational given how much choice there is now and the cash incentives for switching. For instance, customers moving to a first direct account will receive £100 for switching, but if they’re not completely satisfied they can choose to leave the bank and receive a further £100 for their trouble.''

The following question was used to kick-start the study:

A notepad and pen together cost £1.10.

The notepad costs £1.00 more than the pen.

How much does the pen cost?

The results showed 64 per cent of people got the answer wrong, with most opting for 10p.

The answer is in fact 5p because the notepad costs £1.00 more than the pen. So the notepad costs £1.05 and the pen 5p, together they cost £1.10.

People who gave the right answer are 'reflectors'. They use careful, logical thinking; a style linked to left-brain processes.

The report of the study also showed 43 per cent of 'intuitors' had been with the same bank since leaving school. For some this was 30 years ago or longer.

Jason Sharpe, Customer Service and Sales Director at first direct, commented:

“With interest rates at a record low for over a year now, it’s more important than ever for people to stay on top of their finances and ensure that they are with a provider that will deliver the best service and financial return for their individual circumstances.

“The study revealed that almost one in four 'reflectors' had changed where they bank at least twice, while 43 per cent of 'intuitors' had never changed bank. first direct offers a satisfaction guarantee, so customers can be rest assured that they’ll receive a quality service if they switch.

“However, if for whatever reason they’re not completely satisfied, they can choose to leave the bank and receive a further £100 for their trouble. So, regardless of whether they’re a ‘lefty’ or a ‘righty’, people can switch with confidence to first direct.”

It also emerged that 66 per cent of 'reflectors' pay off their credit card in full every month, compared to just 43 per cent of 'intuitors'.

Twice as many 'intuitors' than 'reflectors' pay off only the minimum on their credit cards and 87 per cent of 'reflectors' have money in savings compared to 70 per cent of 'intuitors'.


Notes to Editors

Questions from the The Cognitive Reflection Test (from Frederick, 2005, Journal of Economic Perspectives) used to determine if you’re right or left brained.  If you answer correctly you are left-brained. If you go with your gut and answer incorrectly, you are right-brained.

  • A notepad and pen together cost £1.10.  The notepad costs £1.00 more than the pen.  How much does the pen cost?


    Answer: 5p.  The notepad costs £1.00 more than the pen, so the notepad costs £1.05 and the pen 5p, together they cost £1.10. (in the study 64% of people gave the wrong answer).

  • If it takes 5 machines 5 minutes to make 5 widgets, how long would it take 100 machines to make 100 widgets?

    100 minutes
    50 minutes
    5 minutes

    Answer: 5 minutes.  With 5 machines used to make 5 and 100 machines used to make 100 the time required would remain the same.

  • In a lake, there is a patch of lily pads. Every day, the patch doubles in size. If it takes 48 days for the patch to cover the entire lake, how long would it take for the patch to cover half of the lake?

    24 days
    30 days
    47 days

    Answer: 47 days.  On day 47 the lake would be half covered then the lilies would double in size to cover the whole lake on the next day.

For those who find they are intuitors, Professor Pine has compiled 5 tips to avoid falling foul of the common traps and to develop a more reflective style of money management:

  1. Use a spending diary to track everything you spend for a week, however small. This will highlight your spending habits and any money leaks.
  2. Have separate accounts for savings, bills and spending. Arrange direct debits to put a set amount into each account every month and to pay bills.
  3. Allocate one evening a month to managing your personal finances. Use this time to check your statements, the status of your accounts and to see where changes are needed.
  4. Shop around for the best deals on utilities, banking and major purchases. Weigh up all the pros and cons and give yourself a cooling off period before making a decision.
  5. If you have investments, don’t monitor them more than twice a year or you’ll over-react to every blip in the market

Some more statistics

The statistics for the differences in money styles between the two types of thinkers revealed:

  • 66% of reflectors pay off their credit card balance in full every month (43% of intuitors do)
  • Twice as many intuitors pay off only the minimum on their credit card
  • Almost one in four reflectors have changed where they bank at least twice (43% of intuitors have never changed banks)
  • 87% of reflectors have money in savings (70% of intuitors do)

When looking overall at people’s behaviour with money, the survey revealed that:

  • 1 in 3 people over the age of 55 have always been with the same bank
  • Only 1 in 5 young people (18-25) pay off their credit card balance in full every month
  • Men are more likely than women to pay off their credit card in full each month (63% vs 48%)
  • 1 in 3 young people (18 – 25) have no savings (i.e. for non-retirement or emergency purposes)
  • 1 in 4 people aged 25-55 have no savings
  • Most (92%) over 55s have savings

Sample significance

This study looks at people’s psychological tendencies; for this the sample size is robust and yields statistical power.

Satisfaction guarantee

£100 when switching banking to first direct - requirements

  • Transfer a salary/income of at least £1,500 per month within three months and we will add £100 to your account
  • Only one incentive payment per customer or joint account relationship
  • This offer is only available for people who haven't previously experienced banking with first direct.

If, within 12 months the customer is not happy with us and has paid in at least £1,500 a month for six months and hasn’t banked with us before, we'll give them £100 and help them move their account. They'll also need to have used our Easyswitch service.  All other accounts held with first direct must be closed when they move accounts.

About Professor Karen Pine
Professor Karen Pine is a Professor of Psychology at the University of Hertfordshire.  She carries out research into a range of psychological topics, including children’s development, non-verbal behaviour, behavioural economics, personal development, gift giving and the psychology of money.  Professor Pine’s research has been widely reported in the media and published extensively in national and international journals and books. Her latest book on the psychology of women and money is called Sheconomics.  Research is at the core of the University of Hertfordshire’s strategy to facilitate far-reaching engagement with business, communities and national and international partners. 

For further information, please contact Charlotte Brophy (c.brophy@brahm.com) on 0113 220 0538.

Professor Pine is available for an interview / a contributed article upon request.