NU #8 SAVING & SPENDING

NU #8  SAVING & SPENDING

I wish all of us were taught about saving and spending when we were still in grade school and not later.  I think it is a good idea if banks accept lower minimum amount for a savings account with passbook that would encourage children to save!  I am sure that when we were younger, our needs were simpler.  We didn't even have to buy our basic needs.  It has always been Dad and Mom paying for everything till we finish school and get a degree. That's a lot of savings!    Imagine the humongous amount of money we could have saved by the time we have our degrees in College. 

I wish Department of Education comes up with a subject that will encourage children to save and spend wisely.  This will hopefully result to lesser Filipinos below poverty line.  It's teaching responsibility and handling money well at a very young age.  It will be better if the same subject will discourage unhealthy customs which put Filipinos in debt like asking for a loan just to celebrate an occasion.

Anyway, if you're like the rest of us who only thought of saving after having our first salary, then we have no choice but to budget the wage we get.  One can check out the net to get suggestions on how to do this.  I have my own suggestions:

Make a list of your income and expenses (utilities, basic necessities, financial obligations, etc).  Keep in mind that you should also allot a portion of your wage to savings, emergency fund, and a pampering allowance.  It would be good if retirement is also in your mind.  After listing them down, set aside the amount for savings.  Most experts say that we should save at least 10% of our wage but I think that it's a starting point.  If you can save higher than 10%, that would be better.  Open a bank account for your savings and don't touch it!  If the amount reaches a minimum needed for an SDA (special deposit account) which has a higher interest than savings account, then go for it.  Some invest their money on other portfolios but if you cannot take the risk of losing your hard-earned money, then SDA it is!  Open another account for revolving fund.  If the revolving fund gets too high, get some from it to be deposited to the savings account.  Maybe it's time also for you to peg a higher percentage for savings.  When you are really diligent with your money, you'll be surprised that you have saved more than what you thought you can save.

                Income – Savings (10%, start) = Revolving Fund

                Revolving Fund = (expenses for utilities, basic necessities, financial obligations) +

                                                   (emergency fund) + (pampering allowance) + (retirement) + (allowance) +

                                                   (money to maintain balance in bank)  

How do we increase our savings and peg it to something like 25% of our wage?  We lessen expenses!  If we do that, we will notice that we have too much revolving fund.  Hence, it is at that time we can recalculate how much we can increase the amount we put in our savings.

Here's a list of how we can lessen expenses:

·         Shop generic.  Brand names cost a lot. 

·         Avoid keeping up with your friends or neighbors.  Stick to your budget.

·         Compare prices before you buy.  This does not necessarily mean buy the cheapest though.  Shop for quality but look for a lower price.

·         Buy when there's a promo sale.  Prices are cheaper at this time when there's a lot of promo going on.  But, there will also be a lot of people doing the same thing so it will be kind of difficult to choose and expect a long queue at the cashier.  Watch out for pickpockets! 

·         Eat at home.  It's cheaper when you buy raw ingredients and cook at home.  Besides, you'll be assured that the food you will eat is fresh, healthy, and clean.

·         Pay in cash.  If you cannot control yourself in using a credit card and you're an impulsive buyer, leave your plastic money at home.  That will save you from being buried in debt.

·         Stop impulsive buying.  Make sure you schedule your trips to the mall and grocery.  Make a list of what you have to buy.   This saves not only money but time as well.

·         Deposit your revolving fund in the bank and leave only some to pay the bills and a little for living allowance.  This way, the money will not be readily available to us.  We still have to go to an ATM or the bank to get some and that sometimes controls our spending.

·         Cut out the bad habits.  If you smoke or drink sodas or like alcoholic beverages or love candies and chocolates, cut them out.  They are not good for your health anyway. 

·         Buy machine washable clothes.  Turn off lights, television, and other appliances when not in use.  This cuts down electric bills.

·         If you do not have time to really watch television and would rather sleep at home after a long day's work, then what's the use of cable TV?  Do you need a landline if you already have a cellular phone?

·         Pamper yourself once a month!  It is not good to deprive yourself of everything you want.  Go on, splurge!  You deserve a pampering day for all the work you've done.  It's a reward to yourself that you met your goal of saving this much and keeping out of debt.  Make a ceiling though lest you get from your savings.  If this month's pampering allowance is not enough for what you have in mind, then wait for the next month's pampering allowance, then splurge.  This way, you will not touch your savings.  Or, you may want to save all the pampering allowances for several months then treat yourself with a vacation abroad!