Saving is the bedrock of financial success – almost everything in personal finance requires savings – investment capital, making a downpayment for a house, paying for your child’s education and more. Unless you’re one of the lucky few to receive a big inheritance, you likely have to start building your wealth with your personal savings.
You might be surprised to hear that I used to be a spendthrift and had struggled to save consistently. There were times when I would tell myself to save and I actually saved, only to spend away all my savings subsequently. Relying on my self-discipline was hard. I was my greatest enemy and I could not be trusted.
You might also like
You need a structure to save effortlessly
Much of personal finance issues are psychological rather than due to lack of knowledge. We all know the importance of savings but knowing is not enough when one is unable to do it. The good news is that it is possible to get a spendthrift to save because I was able to do it by instilling structure to shape my behaviour. As Winston Churchill once said, “We shape our buildings; thereafter they shape us.”
I set up a separate bank account and a standing instruction to channel a part of my salary to it. Although I was given a debit card, I did not carry it around and deliberately left it at home. This simple trick was enough to stop me from depleting my savings.
Over time, I realised how important it is to always be mindful of my financial wellbeing, and achieving it just got easier today. Recently, I was introduced to Hugo Save, a digital account that helps me spend, save and invest. Hugo helps everyone improve their financial wellbeing, or what they term as Wealthcare®. It is about spending money smarter, saving money more effectively and growing those savings. It is also about building sound financial habits.
One of Hugo’s features is Roundups – you can now automatically round up your spending and save that amount when you pay using your Hugo card. For example, you pay $5.80 for a cup of coffee, Hugo can round it up to $6 and squirrel away that $0.20 for you into a weekly Roundups accumulation. The Roundups can then be automatically invested into gold. This means that the more you spend, the more you would be saving (automatically). It doesn’t rely on your self-discipline and ability to save. This service is invisible to you and that means you are less likely to interfere with it. A behavioral hack!
Invest while you save, make your money work harder
Hugo doesn’t just help you save, it also makes your money work harder for you by helping you invest your savings in gold via the Gold Vault. It can be done automatically with Roundups or ad hoc. Roundups will sock away your savings and regularly invest it into gold every Wednesday. You can also buy gold manually.
We all know you usually need a minimum amount to invest in gold. For example, the smallest gold coin of 0.1 troy ounce cost S$380 at the time of writing. Even SPDR Gold Shares ETF would require a minimum investment of S$1,172 for one lot size (5 shares).
Hugo allows you to invest in gold with as little as $0.01! It doesn’t matter how little you have, you no longer have the excuse of not having enough capital for investing. Gold Vault is not a paper gold savings account. Your investments are backed by physical gold stored in an London Bullion Market Association (LBMA) accredited vault and insured by Lloyds of London.
I know gold can still be a controversial asset to own but I think it might not be a bad idea if you do not have any positions that can benefit from a potential rise in inflation. Gold has been a classic hedge for inflation and with this threat looming strongly, there’s no harm in hedging a small part of your investments to it. If you are strongly against gold but like the Roundups feature, you can sell the gold and keep cash instead. Hugo is having a promotion whereby you pay no fees in gold transactions for the first 6 months (bid ask spread applies).
Hugo has plans to expand its investment offering to include other products in the future and you should be able to find an investment that suits your needs in time to come.
Motivate yourself with your life goals
I have said that structure can help shape saving behaviours. Another way to increase your savings is to have a goal to motivate you to save money.
Saving itself is a means to an end – what do we want to achieve with the money? It could be paying for a lovely wedding event, paying the deposit for a dream home or going for a holiday. Setting cherished financial goals can motivate you to save.
Hugo helps you do that with its Money Pots feature. You can set up the saving goals in the app and set a monthly amount to contribute to these Pots. Hugo will compartmentalise your savings for you and show the progress of your goals.
All clients’ funds in their Hugo Accounts are safeguarded within DBS.
An integrative approach and an effective behavioral hack to personal finance
Most of the fintech solutions currently available are geared towards people who are already interested in personal finance. High interest savings accounts only appeal to those who are already saving. Low cost brokerage fees and robo advisors only serve those who are already investing. Hugo is much more inclusive by aiming to improve the financial wellbeing for all – regardless of your savings and investing habits or a lack thereof, Hugo remains relevant. Currently, as long as Singaporeans, Permanent Residents or long-term pass holders who are 18 years old and above, and have a bank account with any of the FAST-participating banks can qualify for an account.
Not only that, Hugo takes a more integrative approach to personal finance, tackling budgeting, saving and investing all at once. This contrasts with many other competitors who often take care of just a slice of the personal finance spectrum. Hence, Hugo gives you a simple, fuss-free and complete solution if you do not aspire to geek out on personal finance.
To help you kickstart your Wealthcare journey, Hugo is offering $20 worth of gold free. Find out more and sign up here.
The article is sponsored by Hugo but the opinion belongs to the author.
