Figuring out how to save money may seem hard. But with a few tiny steps, it can be easy. It would help if you start by making small savings each day or week and gradually increasing them as you get better.
These simple ideas can help you on how to save money in the Philippines. Put them to the test today.
How To Save Money Fast
Here are quick tips before you get going:
Time is your friend. There’s no better time to start saving money than today. Take one step in the right direction and get moving.
Any amount will do
It doesn’t matter if you start with a small percentage of your salary at first—even if it’s just a couple of 100 pesos a month. You can start small and work your way up to larger amounts. What is important is that you work on building the habit.
Once you reach your first savings goal, keep doing it. Make a new goal and keep this financially healthy habit going.
Tips On Saving Money
1. balance the convenience of paying
There’s no doubt we’re going towards a cashless society. And it’s hard to resist the convenience that comes with it. It can be hard to notice how much you are spending with credit cards and mobile payment apps.
Scientific studies show that you might spend more if you use these types of payments. People tend to spend more money when it’s easier and less painful to pay.
Not only that, but credit cards also delay the pain of paying. They add some separation between your purchases and the time when your monthly statement arrives. This can lead to more spending, higher debt, and fewer savings—exactly the opposite of what you want.
To save money, remind yourself of the pain of paying. If you are using cash more often, reconsider your everyday purchases. You will have money to save later if you stop spending so much money now.
If you are using credit cards on your monthly payments, make sure you pay on time. Paying a late credit due can negatively affect your credit scores and may charge a fee. Make sure that you pay off the whole amount each month and are always on time to avoid high-interest charges on your credit card bill.
2. Set a savings goal
Setting up savings goals can be a powerful way to build consistency. By doing so, you’ll start giving a workout to your ‘savings muscle’ and help you adopt a powerful and financially healthy habit.
A necessary first step toward setting up your goals is to set a time (or with your partner, if you have one) regarding priorities. Make a list of the things that are important to you that you want to save for.
To save money, start with small, short-term goals. They will give you faster “savings wins,” which will get you hooked on the habit of saving. This will make it exciting and keep you motivated.
Short term goals vs. Long Term Goals
Short-term savings goals are goals you want to achieve within 12 to 24 months. Make your first short-term goal something that you really want. A feel-good goal that is relatively inexpensive that you can save for within a few months.
You want to associate your savings habit with positive emotions and feelings. So indulge yourself a little if you need some motivation to get started.
Long–term savings goals are goals you want to achieve in 3+ years. This helps you keep your financial life in perspective. The temptation to spend will come your way now and then, and having long-term goals can help you stay focused.
Some examples of long term savings goals include:
- Making a down payment for a car
- Upgrading appliances
- Saving for a house
- Paying off credit card debt
- Saving for retirement
Start an emergency fund
An emergency fund can be a life-saver when things don’t go as planned. Once you reach your feel-good goal, figure out how much money you want to save for emergencies and set it as your next goal. Having money saved for a rainy day is a sound financial strategy.
To come up with a target amount, think of the last time you or someone close to you had to face a large, unexpected expense. Are you likely to face that expense? If so, you should aim for at least that much.
3. Automate your savings
There are several ways your phone can help you save consistently. Start by adding your bank’s app to your phone’s home screen.
Set up automatic transfers
Most major banks and credit unions have a free app that you can use to do your banking. Try using it and set up an automatic transfer to grow your savings every time you make a deposit.
With an automatic transfer, you’ll grow your savings consistently and make it easier to figure out when you’ll reach each savings goal.
Use mobile apps to grow your savings
If you want to grow your savings by investing in the market but don’t know how to get started, check out GInvest. It’s quite easy to use and makes it simple to get started with investing.
GInvest allows you to automatically invest in a low-cost (50/month), diversified portfolio of money market funds. You grow your money with the help of an expert. The app is fully automated and provides customer support.
Other apps you may wish to consider which make it easy to invest include Tonik, ING, and CIMB.
4. Make a budget
Financial emergencies are a part of life. They happen when you are not expecting them. It is best to have money saved up in an emergency fund instead of borrowing from friends or family. A budget will help you save more money each month to pay back the debt faster.
Making a budget will add discipline to your finances and help you consistently save more of your hard-earned cash. To use this technique successfully, do it for at least 3 months or more. This will allow you to figure out if you are consistently spending too much money on certain things so you can make adjustments accordingly.
To save money, come up with a plan to cut back expenses. Look for ways to expand your income, too, if your spending is outpacing it.
5. Track your spending
Sometimes, life can be so busy that you might buy something here and there without realizing it. But if you don’t notice those things, they can add up and cost you a lot of money. So, it’s good to find time to track your expenses.
Figure out how much you spend and what you spend the money on each month. Instead of recording every purchase as soon as it happens, look at your credit card statements and bank statements to see how much you spent in the past.
Create categories for the things you spend money on. For example, “eating out,” “personal care,” and so on. Put each category next to the number of money spent so that you can see where you need to improve. This will help you make an accurate budget that is going to be better for your savings.
6. Upgrade your bank account
Saving more is always a prudent idea.
It is even better if you can find a place that has better rates. Banks usually have low rates, so you should look for somewhere else to save your money that has higher rates.
High yield savings accounts
One way to save money is to make your money work hard for you by opening a high yield savings account. These accounts earn you a higher annual percentage yield or APY than traditional savings accounts.
Note: You don’t need to close your current account if you open a high yield savings account. In fact, you can fund your new account electronically using your current bank account.
Also, you can make unlimited deposits and access your money with the same frequency as a typical savings account.
7. Put unexpected Bonuses to work for you
When you receive a well-deserved salary increase, a bonus, or unexpected windfall, you might be tempted to celebrate with a large consumption. Resist that urge and put the money to work for you immediately. You can do that with a Time Deposit account.
Lock up your money
Time Deposit Accounts offer higher interest rates than savings accounts. You will get the rate quoted for the time you have it locked in. The terms can range from 3 to 60 months, but longer terms are also available. Time Deposit Accounts are a good way to grow your savings and help you stay focused on what you want to save up for.
By keeping your windfall socked away earning a return, you’ll get rid of any temptation to spend it. You’ll give yourself time to review your savings goals and decide how best to allocate the money when the time deposit matures. Of course, you can always roll over as necessary.
Note: When you select a term, take into consideration that time deposits have early withdrawal penalties. So choose a time deposit that matures before you need the money.
8. Save for the long term
You can do this with stocks, bonds, mutual funds. And you can open one even if you’re self-employed.
Invest in Stock Market
In a lot of ways, stocks are the primary long-term investment. They have the following advantages:
- You have ownership in profit-generating companies.
- Stocks can rise in value, often spectacularly over the long term.
- Several stocks pay dividends, providing you with a constant income.
- Most stocks are liquid, enabling you to buy and sell them fast
- You can expand your investment portfolio across dozens of different companies and industries.
- You can invest across international borders.
The many benefits of investing in stocks haven’t been lost on investors. The average annual compounded return on stocks, based on the PSEI, is 10% per year. That includes both capital gains and dividend income.
To know more about investing in the Philippine stock market, here’s our guide.
Investing has produced a return on investments despite wars, recessions, and several stock market crashes.
For that reason, nearly every investor should have at least some of their portfolio invested in stocks. Though some investors are active traders, and some engage in day trading, a buy-and-hold strategy tends to produce the most consistent results over many years.
Real Estate Investment Trusts
You can invest in REITs the same way you do with stocks. You buy into the trust and participate in the ownership and profits of the underlying real estate.
The return on REITs generally comes from either mortgage financing or equity ownership. This can include office, retail, warehouse or industrial space, or large apartment complexes.
You can buy or sell your REIT position anytime you like.
That can make it one of the highest-yielding investments you can have.
Mutual funds offer instant diversification by pooling money from many different investors into one investment account. Like any bank savings accounts, the interest earned by your money in a mutual fund will vary depending on how well the underlying investments perform.
Mutual funds generally fall into the category of actively managed funds. That means the fund’s purpose isn’t to match the underlying market index but to outperform it.
For example, rather than investing in all the stocks in the PSE, a fund manager may choose the 20, 30, or 50 stocks they believe in having the best prospects.
The fund manager may use various criteria to determine the top performers – it all depends on the fund’s purpose.
9. Monitor your progress
Monitoring your savings account and watching it grow can be a strong motivator to keep saving. The act of checking on your progress can provide you with positive reinforcement or mind candy. It can encourage you to be persistent and make saving part of your personality.
Every time you check your bank account, it makes you happy. It is a good way to keep yourself motivated to save more money.
Give yourself mind candy
If you haven’t yet, download your bank’s app to keep your savings and add it to your phone’s home screen. By doing so, you’ll be able to track your savings progress whenever you feel like it. It’ll provide you with a similar mind candy that you get when you check on your social feeds. It can reinforce your savings behavior, helping you sustain it for the long haul.
Set new saving goals
You can never save too much. After you save up your first goal, move on to the next. There’s no reason for you to stop. Keep this financially healthy habit going.
Saving money consistently doesn’t have to be a challenge. These simple tips can help you save more and make saving part of your lifestyle.
- Balance The Convenience Of Paying
- Set A Savings Goal
- Automate Your Savings
- Make A Budget
- Track Your Spending
- Upgrade Your Bank Account
- Put Unexpected Bonuses To Work For You
- Save For The Long Term
- Monitor Your Progress