Almost everyone has a desire to save a portion of their income and to prepare for their future. However, many employees cannot do so because they often equate their salary to their ability to save their income.
This scenario is very common to hear among workers whose salary is still low, so they think they can’t save yet.
They would also add that their salary is only enough to cover their expenses, especially if they are their family’s breadwinner and have too many responsibilities — which is very valid.
However, they often think that they can only begin saving once they start earning more. Unfortunately, that day sometimes never comes. As expenses increases along with their salary and nothing is left to save.
Another thing that I notice is that people who don’t save don’t have a budget. They would also tell themselves that it is impossible to make a budget with a small salary.
The desire isn’t the problem with people who fails to save a portion of their salary. It starts with their mindset of relying on their future selves to do the actions they can begin today.
Change your mindset regarding saving.
When we save, we are paying ourselves first.
Think of it as paying your bills. When we get our salary, we always allocate a portion of it to pay for our bills, or else we’ll be cut off.
But don’t be pressured to save a lot immediately, especially if you’re still an entry-level employee, or your salary is low, or you have too much on your plate.
What we need is to try to start saving, no matter how small our salary is. It can be P1000, P500, or even as low as P100 per month. Remember that something is still better than nothing.
Personally, my savings is one of the first items in my budget into which I put my money every single payday. Another thing is it will also help if we change our perspective that we are depriving ourselves because we’re not.
Remember that we will always deprive ourselves. It is just a matter of today or in the future.
Know the reason why you’re saving.
I had a workmate who said that she doesn’t save for an emergency fund because every time she does, an emergency happens.
It seems that she thinks that her savings only calls for the emergency where you will use it. But it is much, much better to have protection when an emergency is to happen than none at all.
There are also many reasons why we save. We can use it for our emergency fund, for purchasing a new gadget, for travel, for retirement, for special occasions, and others. We just need to know the purpose, and it will be easier.
Start saving small, I mean extremely small.
I first heard of the Piso Challenge in Sir Fitz Villafuerte’s Podcast, The 80 Percent, based on Stephen Guise’s book, Mini Habits: Smaller Habits, Bigger Results.
The strategy is straightforward. You just have to put one peso (P1) in a container every single day for 90 days. It may sound simple, but the purpose of that challenge is to develop the habit of saving.
One peso is ridiculously small that it is almost impossible not to do. Though you can just put P90 in one go, it will just defeat the purpose of the challenge.
By putting only one peso for 90 straight days, you develop the habit of saving. Eventually, you can increase that P1 to P10 or more.
The Power of Habits in Savings.
We all have the notion that it will just be easier to save when we have a higher salary. But we also know so many people with high salaries who are living paycheck-to-paycheck.
I also know OFWs who have worked abroad for years but never had any savings for their retirement. There are also high-ranking employees, both in the private and public sectors, who spend more than they earn, thinking that the next month’s salary can cover the expenses they spent today.
So, if we think about it, a higher salary does not guarantee that you can save money in the future. There is a bigger chance that you will get caught in lifestyle inflation than the habit of saving.
Think of it, if you can’t save P500 per month today, how can you be sure that you can save P10,000 in the future? The goal is to make saving a habit and automatic.
The Power of Compound Interest
A quote commonly attributed to Einstein goes like this, “Compound interest is the eighth wonder of the world.”
Saving early, regardless of how much you put in, will give you the advantage of time. Even putting it in a digital bank offering a 4% annual interest rate will provide you with the advantage.
You can read Sir Fitz’s example regarding the power of compound interest here.
Cut unnecessary expenses to increase your savings and find ways to increase your income.
If you haven’t saved any portion of your salary yet have a vice, then there is a big problem with your priorities.
I met people complaining that they can’t save because of the low salary while buying a pack of cigarettes from 7-11. Isn’t it ironic? They haven’t realized that the small expenses they do every day will add up to a considerable cost at the end of the year that could have been their savings.
Similar to vice, if you save a small portion of your daily, weekly, or monthly allowance, if you equate it for a year, then it can be significant. Do it consistently, and over time, then you can build your emergency fund or save up for a future expense.
Saving for our future doesn’t need to be huge immediately, but through consistency and time, it will be significant. Remember that a peso saved is a peso earned.
But also, never put your hope in your savings alone. It would help if you also have insurance, investment, and other financial instruments in the future.
Again, money is just a tool and should serve its purpose. Learn to give back, and you will never lack.
“No one has ever become poor by giving.”Anne Frank
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