The pandemic affected the lives of many Filipinos. During these uncertain times, it is better to reevaluate expenses and consider saving up money for good, especially since there is no clear indication as to when the pandemic will end.
Organizing one’s financial priorities is never an easy task. The uncertainty brought about by the pandemic is not very helpful, but with simple recommendations, it is still possible to save money for both short and long-term financial needs.
In celebration of the ASEAN Savings Day, here are some easy steps to save money.
FIGURE OUT YOUR SAVINGS GOALS. The first thing you need to do is know how much you want to save so the act of saving is a little more focused when you start. It can be for anything—tuition fee, an emergency fund, money for a house and lot, etc. The money you want to set aside can be for any of the following reasons:
Emergency fund – no one knows what will happen in the future. It is better to save for unforeseen emergencies in the future.
Everyday fund – people need money for day-to-day needs such as food, clothing, medicine and bills.
Indulgence fund – set aside money for the wants. This way, impulsive spending using the emergency and everyday funds for indulgences is prevented.
LIST DOWN ALL SOURCES OF INCOME. After figuring out where your money goes, you should now make a list of where your money comes from. This can be from an office job, an online store, or even a side hobby that lets others pay you for things like baking or crafts. Get the total sum of how much you earn in a given period (preferably monthly) for the gross income. Once you have that, you can then deduct tax, GSIS/SSS, PhilHealth, and Pag-IBIG fund (if applicable) for your net income. This is how much you have to spend and save.
LIST AND RECORD YOUR EXPENSES. Take note of how much you spend. First, start with the fixed and recurring personal and household expenses followed by the unscheduled and one-time expenses. It helps to recognize your financial terms and plan the expenses according to what a workable budget and income flow will allow.
CHECK YOUR MONTHLY SAVING CAPACITY. This is simply your monthly net income minus your monthly expenses. The figure you get is the money you’re capable of saving every month, give or take.
DETERMINE YOUR NEEDS AND WANTS. Once you have an idea of how much you are spending in a month, it is important to categorize potential expenses as to needs vs. wants. This process will allow you to manage overspending and avoid unnecessary expenses.
Friendly tip: If there is something you want, take a step back and reconsider. Give yourself a few days to think about it, and if you still want it after that time, then the buy is worth having.
PLAN FOR YOUR GOALS. Setting short-term and long-term goals inspires you to start saving money. Think of the things that you want to obtain. For short-term goals, you may want to decide on your priorities first like saving for a vacation trip or a new smartphone. Attaining smaller goals and enjoying the sense of fulfilment for things that you have saved can reinforce saving habits.
Unlike short-term, your long-term goals require consistent and regular attention. You may want to consider investing your funds in a trusted insurance company to help you achieve your big-picture costs like saving up for a house and lot or preparing for retirement.
SAVE THE MONEY YOU ARE NOT SPENDING. The money left after spending on the essentials should go into the “piggy bank.” Make sure to keep it in a financial instrument you can easily access and monitor or invest in financial activities. Understanding the method of saving can further stimulate you to attain your goals faster.
These are basic ways to save and stretch out funds on hand, but there are also ways to save, invest and generate more funds.
Once you have all this ready to go, you can begin making a list of action plans to help you save. It can be simple things like “I will not spend on snacks,” “I will limit non-essential online shopping to Php 1,500 a month” or “I will find additional sources of income.” Your action plan doesn’t have to be complicated—remember, simple is best.
Some people look into off-the-shelf saving methods like “the 30-day saving method” or the “365-day saving method” which can be very helpful for beginners. The key is to be smart about spending on what you do and do not need.
Understand what you can afford given your income source, compare with what your lifestyle requires from you, and your capacity to save is easy to figure out. It also helps to take the time to reassess your savings plans every now and then to see if you can make it more efficient or suited to your lifestyle after a while.
