It doesn’t spark joy to splurge all your earnings to buy things that you only want now.
You give your time and effort to earn money. So why do you keep spending money on purchases that aren’t truly meaningful?
1. Save Automatically.
Use the autosave features of the Bank where you have opened your savings account.
I took advantage of the autosave feature and signed the authority to debit arrangement with the bank. Every 15th and 30th day of the month, I receive my salary in my payroll account and the automatic savings took place in fixed amounts.
Automatically saving through the debit arrangement took off the pressure of thinking whether I will put aside a certain amount or a bigger amount of money from my salary. Having a fixed amount placed in the automatic savings account also helped me to adjust my expenses and learned to live on certain percentage of my salary.
2. Fund Transfer to Passbook Account
Another great feature to use is the fund transfer to a passbook account.
Every time I receive a salary I save 10% into a passbook account. I started this habit since January this year after reading the book, “The Richest Man In Babylon”.
Fund transfer from my payroll account to my passbook account also lifts the burden of holding the money physically and putting it aside to save. Through digital mobile banking application, fund transfer are easily done in a matter of minutes.
One more advantage of fund transfer is that you don’t need to wait in line or physically appear in the bank to deposit your money.
3. Join “Money Challenge” with Friends/ co-workers
The challenge is simple. Put aside 10 dollars every 15th and 30th of the month. Do that for 12 months.
You can gather 5 or more people to join the year long Money Challenge!
This is the second year for me to join a money challenge with my colleagues at work. We started the second challenge December last year.
It is a small amount but it can be helpful to have these extra savings.
4. Set Your Savings Goal
I use a mobile application that is useful to set goals and monitor the amount that I already saved.
You can pick and download your preferred money savings application in Google Playstore. Most of these applications are for free and they are very useful tools!
You can pick the deadline of your savings goal. I usually set the end date at the 31st of December of the year I am starting to save.
You will also indicate the amount that you want to save. I set realistic amounts that can be achieved with the deadline I set for the goal.
5. Put Money into Bonds and Mutual Funds
Saving money often involves investing amounts into the financial products that is available.
There are several investment products to choose from.
For 1-3 years horizon:
Money market mutual funds are available. You can also put your money in high yield savings account. The banks also offer Certificate of Deposits and Bond offerings that can have a higher rate compared to the typical savings account.
It is important to have an emergency fund that is equal to 6 months of your expenses. It will give you the safety net to pursue new careers or handle challenges in employment like being laid off due to crisis.
For 5 years and long term horizon:
Unit Investment Trust Funds are offered by banks. The funds can be Balanced Fund which is a combination of Equity and Index Funds. It can also be purely equity and purely index funds. The same goes with mutual funds that offer different kinds of funds suited for long term horizon.
There can also be bond offerings that has a term of 5-10 years. You can also try buying stocks of well established companies in the stock market and pick some cash dividend paying stocks.
You can open a retirement savings account as early as in your 20s to benefit the compound effect. Most of the time, the companies you work for also pay for your contributions in your pension plans for the future.
6. Record your fixed expenses for the month
After saving and investing your money, you can now make a detailed record on where you will spend your money.
You must have a list like rent for the month, groceries, travel to work expense, internet, phone bill and other fixed expenses for the month.
Computing for the amounts gives you an awareness of how much money you is remaining to spend.
7. Find ways on how to minimize your expenses
It can be an additional money that you can put in savings account if you can minimize the amount you spend each month.
You can start cooking your meals instead of buying foods that is delivered to your doorsteps.
You can create artworks for recreation purposes instead of entertainment expenses on movies or subscription.
Identify things that you need and make a purchase. And take your time thinking about buying things that you want but isn’t actually a need.
8. Read Books about Finance while Monitoring your Progress
Continuously and never ending improvements are needed to be successful in achieving your financial goals.
I like reading books on finance, savings, investing and also trading in the stock market.
I can benefit from the years of experience these authors had. I can learn on how to control my emotions while investing. I can also apply some good habits of saving from the great financial books I read.
While accumulating knowledge, I am also watching how my money grows with years of savings and investing.
I monitor my savings, expenses and investments portfolio in an excel file. Having the exact amounts is important to be aware of where you are hitting those targets and where you are falling behind.
I like seeing percentages too. I can see how many more percent I need to invest in mutual funds by using my annual salary. I can also see the total amounts I had in savings, invested amounts and the expenses I will pay for.
Doing these help me to save and be prepared for the uncertainties.
I know many people would say that they earn a minimal amount.
I also had the minimum amount received each month but that doesn’t stop me from saving a portion of what I earn every month.
Aiming for Financial Freedom
Some of the goals that we want to achieve in life are related to finance.
Many feel paralyzed and unable to make decisions due to financial difficulties. Money stopped them from pursuing careers that they want.
It takes courage to start doing things that can lead to your success and potential downfall.
I recognize that staying in a corporate job can mean fixed income and limited time.
It depends on you if you want to choose stability in jobs or intensity in business. Your decisions can lead to lifetime success or phases of failures. You don’t know if you are currently on the bottomless pit or the enormous peak.
Success cannot be determined, people have their own definition of success. Financial freedom can also vary to different people.
What I can tell you about is my own definition of financial success.
I can say that I achieve Financial Freedom if I can shift from doing my job to a work that I manage and also create products or services for people. Having my own way on doing work can mean that I’m financially free. It means I don’t depend on a sole income from an institution.
It can feel safe that there’s a steady source of income. On the other hand it’s scary because when the company face losses due to crisis, you will be unemployed and be an applicant in search for jobs.
Employment can be unpredictable like what happened in the airline industries across the globe. Many flight attendants lost their jobs due to travel restriction imposed on different countries that lead to lesser tourist using airplanes to travel.
They found themselves starting from scratch and started to find ways on how to earn money for their family. They thought that their employment is stable but it turns out in a matter of months everything will change because of the pandemic.
This is why it’s important that at the start of your career whether it’s a business, corporate job, or freelancing you also established your own financial goals.
When you have money to support you in times of uncertainty like unemployment, emergencies or downsizing, you can have options in where you want to be and what you want to do in life.
Financial freedom can be attained with discipline and right mindset. Setting goals about your finances and making plans on where your money goes are some of the steps. Determination is also needed to fully implement your plans financially. There can be alot of temptations to buy nice things. It can be a constant battle to stop yourself from buying unnecessary things. It is victorious when you end up choosing the needed items.
As long as you are consistently setting goals, making an effort to reach them and doing your best with your time, everything will be fruitful in the end.
I like to encourage you to start saving right now. Retirement date can be 20 years from now or 5 years later, either way you can save, invest and enjoy the fruits of your labor in due season.