The Brain Science of Better Money Habits

Hello beautiful people,

I recently had a moment of reflection while taking a break after my calisthenics training. I’m currently studying three finance subjects at university, and with my first midterm exam coming up, I decided to revisit effective study techniques. What I realized is that the neuroscience behind effective studying is the exact same science behind changing your money habits!

There’s a massive overlap between how your brain learns new material and how it integrates a new financial behavior. I’m not forcing this connection. It became just so clear while looking at how to study better. It’s fundamentally all about how our brains store and retrieve information, whether it’s a complex financial concept or a simple habit like tracking your spending.

How Your Brain Learns (and Builds Habits)

To study effectively, you can’t just read the material once. You need to approach it in a way that solidifies the knowledge. The research on brain science and learning points to a process that directly mirrors successful habit change:

1. Awareness is the First Exposure

• Studying: You first become aware of the material you’re studying.
• Money Habits: You first become aware of the habit you want to change, like an old behavior around money that isn’t serving you (e.g. emotional spending).

2. Practice with Spaced Repetition (Not Cramming)

To move knowledge from your short-term memory into your long-term memory, you have to practice retrieving it. This means you need to:

• Let it rest: Don’t just repeat it blindly.
• Try to retrieve it: Try to recall the information without looking at your notes. This is when parts of your brain are activated. When you check your answer, you validate your knowledge or see your mistakes.
• Repeat over an extended period: Knowledge and habits are slowly integrated over time. You simply cannot do this in a couple of hours or one day. You need to do this throughout several weeks for it to be effective.

The Money Habit Parallel:

Changing a money habit works the same way. A habit is a behavior already integrated into your brain. When you want to change it, you’re essentially challenging that existing integration. You need to:

• Be intentional and live space in between: You can’t become a budgeting master overnight. You need breaks, and you need to be intentional about practicing the new behavior.
• Repeat with breaks over an extended period: You need to practice the new financial behavior (e.g., sticking to your budget, checking your accounts daily, saving automatically) multiple times across several weeks.

3. Be Patient and Intentional

The longer you’ve had an ingrained habit or piece of knowledge, the more time it will take to change or replace it.

In my case with my finance exam, I’m okay if I don’t “nail” every single concept on Friday if it means I truly get to learn and integrate the principles later on.

For you and your money habits, this means:

• Identify: What is it you’re trying to change? What new financial behavior do you want to implement?
• Plan: Where in your daily/weekly plans do you intend to practice the new behavior?
• Accept: Accept your mistakes and understand that this is a process. Don’t punish yourself if you slip up; instead, intentionally understand what happened and how it differs from your goal, then get back to practicing the new habit.

There’s no point in punishing yourself for not knowing something or for repeating the same action if you’re not intentionally giving yourself the time and space to learn a new, more effective behavior.

So, let’s commit to giving our brains the time it needs to truly integrate these healthy financial habits. It’s not about cramming for a perfect score right now; it’s about building long-term financial knowledge and behaviors that will serve you for life.

What’s one small, intentional money habit you’re going to practice this week to help move it from short-term knowledge to long-term behavior?

Wealthily,
Maria