Learning How To Save

ilonggo investor pigWhen we were young, our parents would buy us coin banks as presents for our birthdays or Christmas. These coin banks came in all shapes and sizes. The most popular shape when we were kids was the porcelain Buddha. We would fill it up with spare coins. Then during our birthdays, we would break the porcelain Buddha and count the money collected. We would then buy new toys, books or clothes using the money we accumulated in our coin bank.

That was our initiation to the concept of saving.

As we grow older, our concept of saving should also mature. But for most Filipinos, the concept of savings is stuck to the coin bank mentality, this time however, we no longer use the coin bank or the porcelain Buddha. Instead, we put our savings in our bank account not realizing that we are actually losing real value of money due to inflation!

Saving money is not easy. However, it is an essential component in achieving future financial security. As we grow older, our financial responsibilities also increase: there are bills to pay, mortgages to settle, children’s tuition fees to prepare for, etc. With piling bills and creditors to pay, how can we save?


Pay Yourself First

Upon receiving your paycheck, what do you do? Which among these three are you?


Are you like Bob who after receiving his paycheck, pay all the bills and splurge and save what is left with his salary? Are you like Tom who would buy things using credit cards, then pay off the advances when his salary comes? Are you like Mat who upon receiving his salary, automatically set aside a portion for savings and live off what is left of his salary?

If you are like Bob, chances are that you would not have enough to save after spending. People with the same behavior, who cannot control their urge to spend would not be able to save at all.

Those who have the same behavior like Tom are those who would eventually be buried in debt because their income would not be enough to cover their unchecked spending.

Most financial mentors like Bo Sanchez, Chinkee Tan, and others recommend an attitude like Mat’s. Mat “pays himself first” before spending. Most of our waking hours, we spend it in in actively working to earn income. It is just right that we “pay our self first” by automatically saving a percentage of our salary for future use, like retirement, educational fund of children, or capital for a possible business venture. For most individuals, a reasonable amount to save is 20% of the monthly salary. Place that amount in your bank account or any financial instrument that would earn you interest. Then, live simply on the 80% percent of your income.

Learning to save is not easy but doable. Save a little each time for a long time. When you do it regularly, it becomes a habit. And when it is already a habit, then, it will just come automatically to you.






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