Savings 101: Learning How To Save
Having learned the importance of setting aside money for a savings fund, we move on to the tricky part: learning how to save. Remember how it felt when you started learning how to ride the bike? The scraped knees, the seemingly endless frustrations of failing, and the muscle pains after every bike riding lesson? The process of learning how to save is similar to that. You need to find your balance, the right amount of determination and perseverance, all the while keeping your eyes on the prize. Here are a few tricks to help you:
Goal Setting.
Setting goals help you put things into perspective. This is especially handy whenever you get that familiar “burn-money-burn” feeling, and sure enough, you find yourself in line at the counter with a mountain of shopping items in your arms. I know, been there, done that, a lot of times. Setting goals, help you curb that feeling.
Now, goals can either be short-term or long-term. Short-term goals could include saving for a vacation fund, emergency fund (typically 3-6 month equivalent of your monthly living expenses), or any other things you may need that requires a sizable amount of money.
Long-term goals are well; of long-term period and benefit. This may include retirement fund, house and lot fund, educational fund, etc.
You may set as many goals as you want, the key is ensuring that you meet them in accordance to their prescribe timeline.
Budget. Live within your means.
Incorporate savings into your budget. Pay yourself first every payday and work your budget around the Income-Savings=Expenses equation.
List down the things you need (e.g. groceries, toiletries, bills, etc.) then find a way to fit it to your “expenses budget” . The market provides lots of options or brands today, choose for the good yet cheaper option.
Avoid unnecessary expenditures and by no means touch the fund you have set aside for savings.
When you are tempted to overspend, think of your goals, think really hard, it will get you through.
Account for Your Money.
Ensure that you keep a record of every peso you spend. This does not necessarily refer to the tiresome and complicated process of recording debits and credits, although you may do so if you want to. What’s just important is that you know where your money is going to.
This is helpful especially when you are making your budget for the next month or payroll period, it will help you keep track of the expenses which you may be able to live without. You might even find out that you can actually decrease your budget for expenses, thereby increasing your savings fund.
It all boils down to setting priorities, to learning how to differentiate needs from wants. You need not deprive yourself of what makes you happy, you just need to find ways on finding happiness in simpler or cheaper alternatives.
Automate! Hello, Mr. Banker.
Piggy banks are a thing of the past, it is susceptible to theft, readily accessible and tempting especially when you are in the mood to shop, and most importantly, non-earning.
The best option then is to put your money in a savings account, be it in a bank or cooperative. This limits the chance of you spending the money you’ve set aside for savings and at the same time ensure that your fund will not be idle, since savings or time-deposit account usually earn interest. Its like hitting two birds with one stone.
Search the web for banks or cooperatives that offer the most profitable savings account scheme for you. You can even apply online. Your banking options are practically limitless.
Saving, like any other activity, begins with a decision, but most importantly it needs action. Like learning to ride the bike, you might have occasional “fall-outs” (especially during holiday sales), but don’t quit, rather increase your dosage on determination and perseverance and soon enough, saving will become a habit for you, a lifestyle. That, in itself, should be the ultimate prize you need to always set your eyes on.
