A few years ago, when I was still blogging at Davao Mommy (yes it’s still alive – just the blogspot one tho!), I used to run an entire section full of personal finance tips called Finance Friday. I was a very finance-minded young mama back then. No, really, looking back, I feel very proud as we were able to pay a couple of things in cash without having to get a loan.
I was very keen on saving and investing money back then because that was the time when neither Job nor I had steady income. He was just starting his business back then while I was freelancing as an English writing teacher. Oh yes, we earned good money. However, there was no guarantee as to how much — or when — our next income would be. So there was pressure to be wise in handling money.
And then there were changes.
Most of you know that Job has been working in KSA since last year. I, on the other hand, have been working for Stay At Home Mum AU since 2015. Suddenly, we were earning regular wages. Suddenly, there’s no pressure to save because another pay day is guaranteed to come. All of a sudden, I stopped saving money, and I kept buying and hoarding things. I say “I” because Job was still saving money. Maybe that’s one of the roots of my complacency, knowing that he has something stored for the rainy day.
It wasn’t a single event that opened my eye. It was actually a series of decisions I regretted. Most of Job’s salary goes to his savings because he doesn’t need to spend a lot of money there in KSA. On the other hand, I often find myself recalling where my money went. I wasn’t in debt, just to be clear. However, there were a lot of unnecessary expenses, impulse purchases, and shopper’s remorse.
It didn’t feel good.
At that point, I have already been working full-time for over a year yet I have nothing to show for it. My salary was going nowhere! I made the decision to do again what I had been doing before I resorted to carelessness. I’m at the point where saving feels familiar again!
Now, it’s up to you to decide how you want to use your savings. In my case, since my emergency fund was already depleted, I decided to save up for a fresh one. Long-term or short-term, whether you’re building an emergency fund (like me!) or saving for retirement, or even if you just want to buy yourself something nice for Christmas, the practice of saving money never hurts. If you’re not used to saving, I’ll give you three practicable tips you can try!
1. 52-Week Challenge
There is no magic formula to saving money. I wasn’t able to begin immediately after making the decision to save again. In fact, I invested in a Sun Life VUL way before I was able to get back on my feet and start saving again. (It only worked for me because I viewed the VUL premiums as bills — and I’m a very diligent bill payer. However, if you’re even less disciplined than me, I don’t recommend getting an investment before saving. It’s very risky.)
First, I started by following a very popular way to save: the 52-week challenge. I recommend this one to people who are not used to saving money because it starts very gently. You can start with an amount as low as P20 or even P10. In my case, I started with P50. It increases per week in increments so your savings grow as well as your character. Because the amount increases per week, your discipline in saving also amplifies. By the time you get to the bigger amounts, you’ll (hopefully) have enough discipline to avoid spending.
The only reason I was not able to continue the challenge was because 15 weeks in, my money was stolen. That kept me from storing my money at home. However, it did not mean I stopped saving.
2. Get a Passbook
Instead, I opened my first passbook account at BDO. I’ve had multiple bank accounts but all of them are ATM accounts, which means it’s very easy to withdraw money. With a passbook account, you’ll need to go to the bank, fill some forms in, line up, etc. It’s time-consuming and it takes much more effort. So for newbie savers, I recommend getting an actual passbook account so you will not be tempted to withdraw at whim. Most banks charge P10,000 to open a passbook account, but don’t worry because everything goes to your savings anyway.
My passbook account comes with a debit card, which I treat as if it’s invisible. The only reason why I had a debit card included is because I’m treating my savings as an emergency fund. If there’s an emergency and I’m nowhere near a bank, I can get my money. Also, it’s free so… Anyway, if your account comes with a debit card, too, keep it close to you but don’t touch it.
3. Use Envelopes to Budget
The envelope budgeting is, so far, the most effective budgeting method I have tried. Nothing beats it for me. I have both an accordion envelope (individual paper envelopes also work — anything, really, as long as your money can be physically separated into your budget categories). I just prefer an accordion envelope because it’s more organised and everything is in one place. Also, I like keeping receipts and deposit slips for better accounting.
I emphasised “physical” because you need to be able to really separate your cash. But in my case, I have both the accordion envelope and my current favourite finance app, Good Budget. I use it to track my expenses. I’ve tried so many finance apps and countless expense trackers; however, I prefer tracking my expenses using envelopes, too, as it keeps me from going over-budget.
My budget categories are itemised and my money is effectively separated.
To be completely honest with you, I always go over-budget if I don’t use envelopes. I’ve tried budgeting without using envelopes but it doesn’t work because I can’t see how much I’m allowed to spend within a certain category. There might be a lot of other methods out there to save money; as for me, I only stick to what works for me.
These are my 3 practicable tips if you’re planning to start saving money. I am not claiming that these are the best tips out there. However, you can rely on my word that these are what work for me most effectively. I have lost a bit of money when my initial savings were stolen, but I was able to recover them and even more.
But apart from these tips, you need to have the right mindset. You need to be disciplined. Saving money means reducing your expenses — there’s no other way — so you need to be able to say no to buying unnecessary things. It also means working with what you have instead of always buying new stuff. If you’re determined to save money, you must see to it that it gets accomplished. Otherwise, you’ll never be able to start.
Another thing. I know you have read this a hundred times before, but it’s true. The formula to saving money is always income – savings = expenses. You’re paying thousands for your electricity, phone, internet, water, groceries, but actually, the first person you must pay first (outside God for tithes) is yourself in the form of savings.
Never spend your money without setting aside something for you first. How you divide your income is up to you; the main point is that you should pay yourself first.
How do you save money?