(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 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!