(Photo from AFP)
INQUIRER.net’s personal finance offering for the day has a quote that needs to be given the limelight as often as possible:
Some people reason out that with their meager income, they can’t afford to save. But the reality is, no one can afford not to save.
I realize that there are different successful strokes for different folks when it comes to savings. I am not anal with tracking expenses (just like All Financial Matters and he said it so nicely hehe) so jotting down each expense in a worksheet doesn’t work for me also. For others, that’s the only way they can save regularly.
The single most important tip I have heard so far on saving wisely is automating your savings. I was interviewing a newly wed couple last weekend and their eyes just lit up when I told them about automating savings.
It’s no big surprise why people like this tip. Budgeting is such a painful experience. Shopping on the other hand is bliss! So, the best way to save is not to let that money pass through your fingers. Automate your savings, and spend what remains the way you want to spend it! Simple, quick and easy.
How do you automate your savings? Let me count the ways.
- 1. Set up a separate bank account (passbook only) and write yourself a check for 12 months to the tune of whatever amount of savings you target monthly. Every payday works too. Treat this check as your most important “billing” for the month, second to tithes.2. Set up a separate bank account and program your payroll account to transfer a set amount to that separate bank account regularly, monthly. My checking account with Philippine Savings Bank has this feature. Many other banks already have this service also. If your bank doesn’t, maybe it’s time to switch!
3. Some mutual funds, unit investment trust funds, and variable unit-linked products also allow payroll deductions. This is another option.
For this to work, however, credit card debt and other high interest debt should be at a minimum. No use saving when you’re paying high interest on consumer debt.
Say this with me: no one can afford NOT to save.
Saving automatically will allow you to enjoy what you have. Shop, spend, eat with gusto, because you have already taken care of saving for tomorrow. Compare that with trying to track each little expense and scraping savings from the bottom. Nope, not for me. I like my steak eaten with a smile ☺
April 29th, 2009 at 10:16 am
[...] No one can afford not to save [...]
May 28th, 2008 at 5:54 pm
[...] up this tip by automating your savings. If your bank can’t do this for you, transfer to another [...]
February 2nd, 2008 at 5:51 pm
Salina, I was just reporting on the GNP figure. I wasn’t trying to make people believe in it or disbelieve it. And I haven’t deleted any of your comments, FYI. If there are any that have not made it to the comment section, they were probably caught up in the spam moderated list. When I am in meetings, comments will not appear because I have to approve each one of them, so there may be some delays on some days.
This is a blog that wants to deepen discussions on money matters so that we can all help each other to become financially independent. We encourage everybody to join the discussion. That means there is space for everyone with different opinions. But we all have to respect each other’s points of view — that’s the only way for humankind to move forward. Participating in a blog or forum means we have the maturity to handle diversity of opinions — and should not expect everyone to think the way we do. Regards.
February 2nd, 2008 at 5:45 pm
Jersey Girl, sorry to hear about your lactation problem. It seems you did your best to develop your milk supply — you even went to a lactation consultant. Problem with most mothers especially here in the Philippines is we don’t even try and just accept that the bottle is the best way to breastfeed. You belong to a very small percentage of the population of women who cannot produce enough milk, but you were smart enough to find ways to reduce the cost of formula. Way to go girl! Thanks for sharing!
On another matter, while I was reading your comments, I realize that a lot of people don’t realize the cost of migrating to another country. My mom and sister has been going after me to migrate saying it would be better for finances and stuff like that, but I have a feeling it’s not as easy as that. Do you think it would be a good idea to start a discussion on the costs of migrating? Some people I interviewed, for example, said if they were given the chance to decide all over again, they wouldn’t have gone to the US to live. Some naman said it’s still way better than the Philippines. I want to poll people on this. What do you think?
February 2nd, 2008 at 8:39 am
It’s my pleasure to share my experiences esp if it will help others….Thank you Salve for the breasfeeding tip to save but I have lactation problem - I don’t produce enough breastmilk. I tried on my first child and even with the help of a lactation consultant but I failed to produce enough to make him grow because he was almost 1 month old then but he wasn’t back to his birth weight yet and I got so scared for my baby that’s why I switched to formula -and voila, in a few days, he gained weight immediately…. In my case, it’s a myth that babies become sickly when they are fed formula… not my 3 babies, ages 3, 2, 1! They are all healthy, didn’t get seriously sick at all except for the usual cough and colds due to weather conditions and the only visits they had with their pediatrician are during their well visits when they get their immunizations as required for all infants here in the US. Although I don’t produce enough breastmilk, it’s a consolation that they got the initial most important breastmilk, the colostrum which they got during the first 2 weeks of feeding… So I have the conclusion that not all women are naturally equipped with enough lactation abilities…. anyway, to save on formula, we signed up online with the formula company and they send coupons for us in the mail.
February 1st, 2008 at 8:55 pm
Salva: Now, You know why there is hardly anybody posting in your blog. You’re bias! You keep deleting my posting I guess you don’t like what I post. Oh, well. Since this is your blog you have every right to delete any posting you don’t like. You sounded just like Gloria Arroyo, The FAKE PRESIDENT OF CEBU. Anybody who speak against her bogus regime either they’re missing, Rot in jail or get kill. I got the message.
February 1st, 2008 at 7:59 am
hi jersey girl, thank you SO much for sharing your experiences. i’m pretty sure they will enlighten many couples who read this blog. those who are reading this may email this to your friends and family, just please add a link back to moneysmarts
so they won’t think you cooked these up.
it’s so amazing what you have accomplished so far because changing behavior is the most difficult part of personal finance. most of the times, people already know the principles of saving, but actually doing it is the real difficulty.
here’s another tip for you: if you are having another baby, breastfeed! avoid the bottle during the first two months, nurse the baby anytime he wants to establish your milk supply. it’s tough but the savings in dollars is really huge, not to mention you don’t have to spend on bottles, time and money to sterilize them, less expenses for doctor visits because breastfed babies are less sickly. but the biggest benefit is the bonding time and emotional health of those who are nursed by their moms. i know by experience
all the best to you, dear.
February 1st, 2008 at 7:52 am
I am always inspired by the movie featuring the life of the Old Testament bibilical figure Joseph. He interpreted the Pharaoh’s dream which is the 7 years plenty and 7 years famine. During the 7 years plenty, Joseph, the governor, saved Egypt’s harvest which eventually was able to feed ALL of the people of Egypt when the 7 years famine came…. That’s the biblical wisdom that I also used to convince my husband. You never know what may happen in the future. The past 3 years, there have been yearly layoffs in the casino where he works - and it’s always a blessing that the company is still keeping him - hopefully until he retires! This possible layoff and the effect of this on us his family always hangs over his head - I made him realize that he may also lose his job later on, we never know (Oh God forbid!). So it will be a big, big regret if we are not able to save anything! So I made him use his foresight that will definitely help us in the future…. I always read about saving an emergency fund equivalent to 6 months paycheck — although this is a long shot for me, it will be better to save little by little that in due time - I figured in about 5-7 years, will definitely accumulate equivalent to that 6 months paycheck - just like the coins saved in a jar — pag binilang mo na later on, magugulat ka na lang, thousands na pala ang amount nya! (I also learned this from my mother - she saved her 5 pesos coin — nung napuno na yung jar nya, naka 3,000 pesos sya!!!)
Also as a couple, we just live simply — am simpler than him kse when I began having kids hindi na ako yung shop ng shop (kya I avoid the malls as much as possible). I just shop when it is really needed. My husband is the one who buys and buys - but I always remind him between NEEDS and WANTS — kya dapat isa sa amin should always push and maintain the saving part coz if not, we esp the kids will suffer if both of us will always spend and spend and be careless financially. Here are some of the saving tips we do: we buy some stuff by bulk from a warehouse club and we use coupons esp for diapers and formula; my husband does the oil change for the car and sometimes the car wash weather permitting, we try our best to stick to our weekly budget. We don’t mind accepting hand me down clothes esp. for the kids, they outgrow them easily anyway (and these clothes saved us a lot — it’s very expensive here in the US, you know). They receive new clothes as gifts from relatives anyway. I only buy new clothes for them occasionally, sometimes clearance items that are nice! I really think so many times before buying. Last Christmas, I only bought each kid 1-2 toys - they received toys from relatives anyway and kids easily lose interest in them. These are just some ways we try to save…
Anyway, yes as a couple, although it is complicated and always a challenge, saving still works for us.
February 1st, 2008 at 5:19 am
It’s job circumstance that made me convince my husband. Yearly, my husband, a casino dealer, has to spend 2 weeks forced vacation (one week at a time each on different month) and he is only paid company pay which is only about 1/4 of his weekly pay, 3/4 comes from tips therefore, a big loss of wages. We went through this situation for 3 years and it was hard paying the bills during the week that he won’t receive his pay (the vacation pay is paid lumpsum a week earlier but the following week he doesn’t get paid - that’s why I dread his vacation times!). My husband had to call his grandmother to help us out paying the bills during that week of vacation… Therefore, I used this situation and adamantly used it to convince him that we need to save for the week of his vacation (2x a year) that he won’t receive any pay plus the fact that I don’t want him always running to his grandmother for financial help - I want us to be financially independent because there will come a time that her help will not be available anymore when the time comes his grandmother will pass away (She’s 92 y/o now). And that I think convinced him to save…. plus the fact that he is saving now for a downpayment for the bigger house that he wanted to purchase in the future…. How we did it? My husband opened a savings account in a bank/credit union which is half hour drive from us - inconvenient for him to go to, also we are not carrying our ATM cards. They are put away so we won’t easily use them. The amount is automatically deducted from his pay, therefore it doesn’t pass our hands. Initially it was $25 per week - so that will be $100/month and we will come up with $1200/year. I told him $25 per week is like going to McDonalds for a meal which we can forgo… and then few months later we increased the savings to $50 - my husband increased his tax exemptions which increased his pay that gave room for the savings. My husband said instead of making the State save the money for us (we get bigger tax refund every year when the tax exemptions are lower), why not we just save the money ourselves which is more liquid, i.e, easier to access when the real immediate need arises… We were already able to withdraw once from the savings when we needed it while the savings still keeps on going without us really feeling it (i.e. hindi masakit sa bulsa ang bawas every week - as I said, perang di namin namamalayan). So now we have an outstanding savings of about $1200 (this amount only coz as I said, we started low on the initial months and withdrew money once)… I read in other columns the advice of saving the lumpsum money that you will receive. This tax time, although lower this year bec of increased tax exemption we will still be receiving about $700 tax refund — we got 3 kids that’s why we got higher tax credit. Next year, it will be four, therefore, higher tax refund and more savings!!! Also, the US economic stimulus - tax rebate that will come in May - that will be $2100 for us — I am thinking of saving them, of course but my husband is already thinking of spending them for a plasma TV!!! I can live without the plasma TV but he can’t!!! Not to actually deprive ourselves of a little want, I will just strike a compromise with him - I will save half of it and he can spend the other half. As you said, Salve, shop, spend and eat while saving for tomorrow — striking 2 birds in one stone — we also want our steak (the best one - fillet mignon!) for our dinner too and eat them also with a big smile!!!…. When we have bigger savings, next one I will try is saving them through CDs para naman kumita kami from banks through interest earned!…. Happy saving everyone!!!
February 1st, 2008 at 1:39 am
Hi jersey girl,
How about sharing to us how you convinced your husband?
Nina
January 31st, 2008 at 3:02 pm
P3, you are right. what matters most is that people save regularly — not some one-off thing that will get constantly reduced by the more regular spending forays.
January 31st, 2008 at 3:00 pm
ding, thanks for pointing that out. when you added figures to the illustration, it’s more effective. you are actually defining both saving and investing. the two go well together.
January 31st, 2008 at 2:58 pm
jersey girl, great work! you have to let us know how you did it. personal finance for couples is a great topic. She saves; he spends — that sort of thing can make life really complicated. but people like you still make it work! yey!
January 31st, 2008 at 2:57 pm
oda, great idea. in fact, that should be a constant feature, updated regularly.
i used to have this feature for a website on personal finance that i used to manage. it was interactive, and i had a memorandum of several banks to update it regularly from their end. it was one of the pages on that site that had the highest hits. sige, will add that in my to-do list! thanks for the advice!
January 31st, 2008 at 2:57 pm
paetechie, buti nga kung trips to the ATM eh. i have a feeling people still do it over the counter. ngek!
January 31st, 2008 at 2:57 pm
femaad, hey how are you girl! i can see that you prefer to attack savings on all fronts, both the “skim-at-the-top” strategy and saving the coins and small bills. no wonder you were able to buy your house “by accident” hehe. thanks for the tips doc!
January 31st, 2008 at 2:24 pm
I agree with the wisdom of savings. However, savings alone does not guarantee to meet your financial requirements in long term. Savings may be good for short term in case of immediate energy needs like hospitalization bills and other unexpected expenses come along your way.
Savings in a longer period apparently does not guarantee financial prosperity as the purchasing power of money saved over that period could be deminished. Like for example in my case. I saved PHP 500 thousand 5 years ago. The purchasing power of that amount is already decreased to PHP 250,000 as it was depreciated by inflationary factors occured over the longer period. One typical example was that 5 years ago you can a 1 bedroom condo unit for SAR 500 thousand in cash. At present, a 1 bedroom condo unit may cost you about SAR 1.5M to buy in cash. Remember always time is of the essence. The value of your money may change anytime. The Peso now may cost 0.50 after a year much so with the other foreign currencies like dollar.
A prudent way to catch up with inflationery cost and to avoid the depreciation of your savings now is to invest it to any income generating assets. In this way you can offset the inflationery cost as the years go by vis-a-vis with the appreciation of the assets.
Lastly, Savings is good in a short term, however, investing in income generating assets can do more.
January 31st, 2008 at 2:18 pm
I agree with the wisdom of savings. However, savings alone does not guarantee to meet your financial requirements in long term. Savings may be good for short term in case of immediate energy needs like hospitalization bill other unexpected expenses come along your way.
Savings in a longer period apparently does not guarantee financial prosperity as the purchasing power of money saved over that period could be deminished. Like for example in my case. I saved PHP 500 thousand 5 years ago. The purchasing power of that amount is already decreased to PHP 250,000 as it was depreciated by inflationary factors occured over the longer period. One typical example was that 5 years ago you can a 1 bedroom condo unit for SAR 500 thousand cash. At present, a 1 bedroom condo may cost you about SAR 1.5M to buy in cash. Remember always time is of the essence. The value of your money may change anytime. The Peso now may cost 0.50 after a year or so much so with the other foreign currencies like dollar.
A prudent way to catch up with inflationery cost and to avoid the depreciation of your savings now is to invest it to any income generating assets. In this way you can offset the inflationery cost as the years go by vis-a-vis with the appreciation of the assets.
Lastly, Savings is good in a short term, however, investing in income generating assets is the key to financial freedom and prosperity.
January 31st, 2008 at 10:19 am
if you desire to make a difference someday, 1 must have to start saving NOW. Start early .. if you are in highschool, P200 a month will be P2400 a year. Am sure your ninongs and ninangs can add to it
.. same if you are in college … the more you should save … bawas bawasan ang pagtetext and computer games and chat 
P500 a month would make P6000 a year. No need to wait when one is working if you can have it for free (LOL), and if you’re working? hehehehe wala ng palusot with what Salve mentioned.
Some would even talked with their employer to deduct an amount greater than their witholding tax for savings.
It would even be better when a couple is into it like JerseyGirl.
Saving P1000 a month will make P12000 a year … P36000 in 3 years. WOW!
It is a slow process indeed but a sure one, and while saving … open your mind to oppurtunities where you can invest the money you saved since THAT should be the reason you are saving in the first place. B4 investing, it would be nice to get ideas or cosult from columns like this ….. maybe Salve would help
Good Luck to us all
January 31st, 2008 at 9:44 am
omski, i think you are right. most people just don’t know what options are open to them. the company i used to work for, for example, had this plan. i worked there for five years and i never remembered making the time to understand it and taking advantage of it. when i left, it was all a blur so now i wonder if i would have gotten more from that plan. good topic for a future post.
January 31st, 2008 at 9:39 am
owlman, then you belong to a very small, but lucky portion of the global population! can i have just one drop of your genetic code?!! haha
January 31st, 2008 at 9:38 am
ian, i don’t have a list of them but i know of a couple like philam and MFMCP. I realize a survey would be a good idea. Some VULs also allow automatic charges to your credit card. I like this because I get rewards, but this will only work for those who pay their credit cards in full monthly.
January 31st, 2008 at 6:36 am
Early last year, I was able to convince my husband to save money — finally!!! He’s just the type who would not let money last long in his hands and will spend it right away — for WANTS and not needs… But finally won over him and let him realize the wisdom of saving — saving for the rainy days, ikanga… anyway, we opened a separate savings account in a bank where it will be inconvenient to withdraw the money - para hindi kami ma-tempt magwithdraw…and started out saving $25 per week deducted from my husband’s payroll… and few months later, we increased it to $50 a week… these savings are what I call - perang hindi mo namamalayan, may malaking pera ka na pala at the end of the year…. yes I agree, it is better that the money you will save should not pass your hands — diretso na sa bangko and just let it grow!!!
January 31st, 2008 at 1:47 am
salve, you know what i think your readers may want to see on this savings thread?
a comparison sheet of the different savings options and rates offered by phillipine banks. so your readers can see for themselves where best to put away their pesos for a rainy day.
in case something like this already exists, then just ignore my post haha…
cheers,
oda
January 30th, 2008 at 11:11 am
i do this with my chinabank current account by transferring a specified amount at regular intervals set in my online banking account to another account. my regular payments to our cooperative also work this way. chinabank will send me SMS and email confirmation of my transactions
no more trips to the ATM to transfer funds
January 30th, 2008 at 10:20 am
hi, salve. you are sooooo right! in these times, we really can’t afford not to save.
it is true that when the cash is on hand, it’s very easy to buy and buy, and then start wondering where all the money went.
now, my husband, daughter and i automatically set aside 20% of gross earnings and deposit in passbook acct. - not easy to withdraw that way, in case some WANT appears in the mall. we also don’t spend our P5 coins and P200 bills. malaki din savings sa gano’n.
my sister, on the other hand, just dumps all the coins left at the end of each day and saves them.
every peso truly counts…
January 30th, 2008 at 9:19 am
Salve,
in addition to your list
4. If your company has retirement fund similar to 401k with automatic payroll deduction , by all means participate on it and increase your share percentage as your salary increases…ours have , and we call it Retirement Plan B, (plan A is the regular retirement benefit) , Plan B is not compulsory, those who want to join only, collected money is handled by our bank invested in other instruments as well…but I noticed..only a few employee joined this Plan B..with the same reason as “meager income…can’t afford to save”
January 30th, 2008 at 8:52 am
Maybe I’m just frugal, but its the opposite with me: Saving is bliss and shopping is often a painful experience.
January 29th, 2008 at 5:39 pm
try metrobank uitf and rcbc.. they have automatic savings program
January 29th, 2008 at 2:34 pm
which mutual funds and UITFs allow payroll deductions?i asked BPI management’s index fund but they said they don’t have that feature