(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 ☺
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