To young professionals, the phrase “petsa de peligro” becomes a life motto. With all the bills that need paying and all the fun things you “promised” to treat yourself to, your paycheck disappears faster than you think, leaving you on a shoestring budget until the next payday. Often, all these expenses make it seem impossible to save up and enjoy your hard-earned money.
The key to healthier, longer, and better lives is to find balance in spending on good things now and saving up for better things to come. Here are simple ways to ease your way into a sustainable savings plan.
- Create a monthly budget.
Thinking about your expenses only when you’re strapped for cash is damaging in the long term. Making a budget plan will allow you to better judge where your money should be going every payday.
After establishing your monthly (or bi-monthly) mandatory expenses, whatever money you have left can be put into your savings. Aside from this, being mindful of your regular budget allows you to better plan for important or sudden financial decisions and commitments.
- Cut back on the "big four."
As a young professional, your top expenses probably fall under: fast food, mobile data plans, alcohol, and coffee. While it's good to indulge and treat yourself every now and then, lessening your expenses for any of these means you'll have more money to set aside for saving.
Can't go without an internet connection or coffee? Take your time to look for cheaper and more cost-efficient options. It'll take some effort, but your wallet will thank you for it later. Learning how to be a better bargain hunter is also a big plus in the long run.
- Start small.
Often, people try to start building a saving habit drastically, setting aside different amounts with no clear plan. This lack of consistency usually makes the attempt ineffective, leading to more spending and less saving.
The best way to start your saving habit is to start small. Decide on an amount (like increments of P10 or whatever is left after your monthly budget) and a schedule for how often you'll be setting aside money (which can range from the end of each week to every payday). This helps ingrain the need to save in a manageable and sustainable way.
- Set up automatic transfers from payroll to savings account.
Withdrawing from your payroll account to manually deposit into your savings account can sometimes be a hassle. Having the amount in cash may also be tempting to spend instead of setting it aside.
With automatic transfers set every payday, you don't need to dread queueing up for deposits, and your money conveniently goes into your savings. It also lessens the temptation to withdraw it immediately and impulsively spend on your wants instead of needs.
- Separate savings into different "bins."
Another practice that can better motivate you to build up your savings habit is purpose-driven saving. Ask yourself, “What am I saving up for?” or “What are my financial goals?”. The answer can be anything—a trip abroad, your own apartment, funds for your postgraduate degree, and even cushion money for emergencies.
Once you know what you're saving up for, you can create separate “bins” for each of your goals. This can take the form of envelopes, coin banks, recycled clear jars or even separate savings accounts. This allows you to better envision what you're saving up for instead of spending it on other things.
- Start investing.
As the old saying goes, there's no time like the present. It's better to start now while you're young, allowing your investment to grow and mature for much longer. This will allow you to cash in on a larger amount when you're approaching your retirement years.
To best keep the balance of treating yourself and saving for the future, you may want to look at unit-linked investment plans that grant benefits while growing your money. This kind of investment plan can also work like a savings account, allowing you to withdraw from your fund for important financial needs.
Saving up for your future doesn't need to be the end of having fun—you can still have your milk tea or coffee fix in moderation. What's important is to be more conscious about where your money is going. By practicing these saving tips consistently, you'll slowly and steadily be on your way to building up funds for your financial goals.
While going on your dream trip or buying your own apartment may seem far off now, starting your financial journey as a young professional can guarantee that you'll be one step closer to achieving it. To learn more about what you can do to grow your savings for your financial goals, talk to a Bancassurance Sales Executive at any of the 900 BPI branches nationwide.