While we’ve been told to save money for emergencies, the effect of the pandemic really emphasized the need to allocate money for when the going gets tough. Even if you came out of the lockdown unscathed financial-wise, it should still be on our agendas to save as much as we can if we’re privileged enough to do it because we don’t know what or when the next crisis will be.
I know retail therapy has kept us distracted in these trying times but saving money will help you out in the future. Trust me, your future self will thank you for it.
Figure out your budget allocation
The budget allocation depends on the person, so start by prioritizing your expenses. Calculate your daily expenses so you can distinguish your spending. Don’t forget that as you allocate the budget, there should be a percentage for savings.
For example, there’s the 20-30-50 method. 50% of your monthly salary goes to nonessentials and daily expenses, 30% goes to rent, and 20% goes to your savings. You can be more specific than this if it helps. There’s no set rule for everyone as we have different lifestyles and salaries so go with what you think is the right allocation for you.
Track your daily expenses
One way to make sure you don’t overspend or ruin your budget allocation is through tracking your daily expenses. By inputting the money that goes in and out of your bank account or wallet, you can make sure you’re right on track. You can track it on Microsoft Excel or Google Sheets, or use an app called Money Manager. You can even just write it in a notebook. What’s important is that you can see how you’re spending money because it’ll make you more conscious of what’s left of your salary.
Treat saving money as a game to make it more fun. In the ₱50 challenge, you store away every ₱50 that you get. You can also choose your own denomination. Maybe start with ₱20 and work your way up. It might be a small amount now but if you keep on doing it, the amount will pile up!
Store your savings in high-interest savings accounts
While different banks have their own perks, digital banks in the Philippines (CIMB, ING, Komo) are known to have high-interest rates. These interest rates make it possible to earn money while doing nothing. They may look small now, but the higher your savings are, the higher your earnings from the savings account will be. If you’re new to digital banks, you can start with GCash’s GSave option. You can easily move your money to GSave to get that 3% interest rate.
Invest for the long-term
If you find your savings account to be lacking in terms of interest rates, maybe it’s time for you to invest for the long-term. While investing in the stock market may give you high returns, it is not without risks. If you’re just starting out and want something passive, then you can try Pag-IBIG’s MP2. Unlike the required 20 years of maturity for the usual Pag-IBIG fund, you can withdraw your capital and dividends after 5 years if you opt to open an MP2. The interest rate for this one is high (7% for the year 2020) so you can expect the amount you put in your MP2 to go up after 5 years. You can also start with just PHP 500 so almost anyone can start investing now.
These are just some options you can explore to start saving money. Allocate funds for your savings so you’ll have an emergency fund, or passively grow a part of your savings in platforms like MP2 if you don’t plan to touch them for a while. If you’re looking for more tips, Reddit has a nice community of Filipinos who want to save money as well. The threads are encouraging so you might want to check them out here.