🧠 💷 How to Train Your Brain to Save Your Money

Welcome back to Hugo’s Habits 🧠 

Happy Sunday.

Long week?

This week, I came across an amazing course online.

Personal finance may seem like the most boring thing in the world, but it’s very important.

The course below, “Personal Finance 101” is completely free to enrol!!

In literally 30 seconds, you get access to over 3 hours of content, spanning 17 different subjects, from saving for a house to credit building.

All for completely free! Just click the link below 👇️ 

Note: This is not a sponsored link, I just want to provide as much value to my readers as possible!! 

Finally, let’s dive in…

In today’s issue:

• My personal saving strategy

• The 3 Golden rules of spending

• How I trained my brain to save thousands at 21 years old.

• and more…

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(Estimated read time: 3 minutes)

Best Links This Week ⚡️ 

Here are the best articles and information I found this week while researching 👇️ 

🧠 Cool Neuroscience Shit

Why you’re so bad at saving, according to neuroscience (link)

MIT scientist tells what happens to your brain during money troubles (link)

How the brain changes with learning (link)

21 Fun Facts About The Brain (link)

📋️ Practical Tips and Strategies

31 Creative Ways to Save Money (link)

How to “Round-Up” Saving Apps Work? (link)

Best money-saving apps February 2024 (link)

8 Financial Tips for Young Adults (link)

🔬 Updates from Research

Pandemic Had a Lasting Effect on Over-50s Cognition (link)

Mind-reading Cap Turns Thoughts to Words in World’s First (link)

A Cutting-Edge Way to Treat Alzheimers (link)

The video below hugely influenced my saving strategy when I first started.

Highly recommend 🔥 

My Super-Effective Saving Strategy 📈 

If you're like me, a young adult navigating the somewhat murky waters of personal finance, you know how crucial it is to have a strategy that isn't just about hoarding pennies, but one that truly maximizes your hard-earned cash.

Today, I'm dishing out my playbook on how to save effectively- from one lost soul to another.

The Golden Rule: Have Goals That Excite You!

First things first, you gotta know what you're saving for. Is it that dream backpacking trip across Europe? Ibiza in the summer? New car?

Who knows what people want?

Whatever it is, make it something that lights a fire in your belly.

Having tangible goals makes the process of saving so much more rewarding.

As long as you're saving for something you want (Ibiza), and not something someone else wants for you (House deposit).

You’ll be surprised how these intertwine over time.

Now, the best way to save money is to not spend it.

Can’t believe I even just wrote that but you’d be surprised how many people say “I saved £50 this month!”

But spent £200 on drinks and vapes.

I’ll get into this in more detail later on.

Anyway, I will now give you a 3-step strategy on what to do when that sweet wage hits your account.

1. Prioritize Savings: 

Immediately after receiving your paycheck, earmark a portion for savings.

Whether it's for an emergency fund, a future investment, or a specific goal, treating savings as a non-negotiable expense ensures you consistently build your financial cushion.

Decide on a percentage or fixed amount that goes straight into a savings account before you even start thinking about spending.

Saving should be like paying a tax to your future self.

2. Cover The Essentials Eraly: 

Next, tackle your fixed expenses—rent, utilities, loan payments, and any other recurring bills.

Paying these essentials promptly ensures you avoid late fees and maintain a solid financial foundation. This step is about securing your basic needs and responsibilities, ensuring peace of mind until the next payday.

3. Allocate for Spending (Guilt-Free): 

With savings set aside and essentials covered, what remains is for your variable expenses—groceries, entertainment, FIFA points, etc.

 (Joking, but make sure you have fun or, literally what’s the point).

Budget this remaining amount carefully to stretch it until your next payday, focusing on needs versus wants.

If you end up with extra funds, consider adding them to your savings or toward paying off any debts.

Don’t spend just to spend.

The 3 Golden Rules of Spending 🥇 

Navigating financial decisions, especially around payday, can be simplified with the "3 Golden Rules of Spending."

Rule 1: The 7x Affordability Test:

This challenges you to consider if you can afford an item ten times over. If not, it's an indicator that the purchase might be out of your financial comfort zone.

This rule isn't about limiting joy but ensuring financial stability.

It's a quick reality check to help you differentiate between what you can comfortably afford and what might stress you out.

Rule 2: Never Cheap out Your Health (or Wealth):

Pivot on the idea that every expenditure should contribute to your health or future financial growth.

This will change your life.

Investments in health can lead to long-term savings by avoiding future medical expenses and enhancing life quality.

Similarly, spending on education, skill development, or tools that could increase your income potential is viewed as investing in your future.

This rule prompts you to evaluate the long-term benefits of your spending decisions, encouraging investments that will pay dividends in terms of well-being and financial security.

Rule 3: For You or the Photos?

Do you want it, or do you want people to know you have it?

This rule addresses the modern challenge of distinguishing between genuine needs and desires driven by social influence.

It questions whether the motivation behind a purchase is personal satisfaction or the desire for social validation.

Stick to these, and at the end of the month you won’t be waiting for payday like your life depends on it.

That’s all for this week!

Any questions?

I answer all DMs on my socials, or just reply to this email! 📨 

This newsletter is designed for you to introduce habits to allow every reader to be the happiest, healthiest, and wealthiest version of themselves! 🧠 💷 

See you then,

Hugo.

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