Having met a lot of people in my line of work and hearing some sad stories about money matters, I thought of sharing some views about saving which I found very effective per my experience.
What worked for me though may not work for you , so I am not saying that you should do the same. However, I am thinking that if you have no savings at this point in your life, then maybe you will learn a little from what I am about to write.
As most of you know, I came from a very poor family. I worked my way from the bottom to the top. The keywords there are hard work. Not use someone else to better one’s self. I value my experiences, despite all the hardships, because I’ve learned so many lessons from it. And if not for those difficulties, I would not have strived so hard to be where I am today.
I am glad that I grew up poor because I wasn’t exposed to expensive things. I wasn’t used to having anything I wanted on a whim. My family had to do without, most of the time. But my childhood was very happy, despite the lack of material things thereof. I was an honor student since my elementary days. I found it a blessing that I have aunts who donated monies so I can have a new dress when I graduated valedictorian back then. Thinking about it now, I get teary eyed. And thankful to God for having blessed me with not just intelligence, but his guidance and wisdom , as I follow my “walk with faith” on a daily basis.
So here are some of what I’ve learned over the years.
1) Saving Money is a decision one has to make everyday. In my case, I ask myself do I need this? Or this is just a want? If the answer is , yes I need it. Need it really… not just justifying a want. 🙂 Then, I decide to purchase it. If it’s just a want, then it means that I can live without it. Looking at a Louis Vuitton bag in Singapore and Los Angeles the previous years, I know that I can afford it. But I couldn’t see myself buying something that expensive when I do not need it, no matter how much I liked it. 🙂 I asked myself, what could possibly be my best reason in buying it other than saying that I have one or two or three. lol I am not judging. Each of us has our reasons in doing what we do. I am just saying that I cannot find one good reason to indulge in such a whim. So I content myself in buying the cheap version in a local store in Davao.
2) Borrowing Money intelligently. If one is in business , it is okay to borrow from banks. For instance, if your money is earning more in your investments. then I believe that it is okay to leave such monies there so it will continue to grow. And just borrow from the bank if you need to purchase real estate at a lower interest rate.
Calculate how much is your loan interest rate per annum compared to the interest rate you earn from the business. If the income is higher compared to the interest payments, then I would go for it. If it’s the opposite and I really need to purchase that real estate, then I pay cash instead.
On a small level, if you are earning P15k per month. And have no savings, I am saying that you should not borrow to buy an expensive phone or any gadget. That is not an intelligent decision. And will surely put you behind. My suggestion is this – read my #1 tip. 🙂
Example, I pay for a post paid plan. It comes with a free phone every other year. This year, what came in the mail was a Samsung Note 4. The point of the story is this – I do not buy expensive phones. I wait for the free ones given to me. Been doing that for years. That means, if you have no postpaid plan, and no savings to buy for a new one – DO NOT BORROW. Wait until you’ve saved enough to buy the one you like. Or buy a cheaper version. But then again, that’s just my two cents.
In the Philippines, we have a lending scheme that’s called 5/6. The essence is that if you borrow 100, you pay back 120. That’s 20% increase of the original amount. If you borrow at that rate, then make sure that you earn more than 20% so that you will be able to save. If you know that it won’t bring you a higher Return on investment, that means you are sinking. Then do not borrow at that rate. Simple.
3) Investments, Investments, Investments! This is radical. So it’s okay if you tell me I am crazy. 🙂
Years ago, I thought of dividing our income into three parts. One part went to savings. The second portion went to investments. The third part went to expenses. Ahh yes! Of course, it was difficult. The savings and investments were non-negotiable. Seriously. I know, only crazy people does that right? lol So not being able to use two parts of our income, we made sure that our expenses were just enough for what we need. No extra expenses in other words. It taught us discipline. Most of all, team work. I think that’s nice for husbands and wives to practice. We had one goal in mind. And we made sure that we reached that goal.
Fast forward to now, did we make it? Yes and more. 🙂 Now, I can afford to retire if I want to. I can travel wherever I want if I want to. Believe me when I say that the sacrifices we made back then paid off. Thank God. It is just a matter of perseverance and prioritization.
Another issue I want to mention with regards to investments – I have met people here who lost their monies on bad investments. My comments are these –
a.) Never go into business that you do not know.
b.) Do not invest in something that you do not understand. Ask and research. Do your due dilligence. If it’s too good to be true, then it is too good to be true in most cases.
c.) If someone gives you a business proposal, where ONLY your money is at stake. Say no. Why, most people here do not care specially if it does not involve their money. So don’t walk, run away… That’s what I would do.
d.) On lending investments, ask for a real estate collateral. Just don’t give away your hard earned monies without something in return, e.g. – draft a mortgage contract through your lawyer or prepare a promissory note. Those are admissible in court if they do not pay. Bottom line is, protect yourself, first and foremost.
My tip on lending without documents – give only what you can afford to lose or give away. I’ve read so many posts in facebook where people ask their friends to pay for their debts. lol . If you have to do that, chances are you already lost your money.
e.) Safe Investments – time deposit. Just know your banks. And remember, PDIC is only P500,000.00 . Then, there are Treasury bonds. Real Estate (please check the titles through the Register of Deeds always). Stock trading is nice if you buy for a long term investment. But if you choose short term trading, I think that’s risky if you don’t know much about it. So does currency trading. I used to be a currency trader. So I will not recommend that if you do not know anything about it. Insurance , medical and life insurance are good investments. If you are working, the cheapest medical insurance is your Philhealth. That’s a big help right? So if you’re working and has no Philhealth, ask your boss. You are supposed to have one.
4) Living Within Your Means. No, that’s just not a phrase you read on books. It’s not a suggestion either. It is a way of life. Really.
Knowing what you can and cannot afford, do not splurge on things you do not need. Hoping that God will bless you with more money to pay off your credit card, etc. Yes, in His goodness, God will always provide. BUT please think – we have to be responsible as well. This is why so many of us are below the poverty level. The hope that God will take them out of such situation. Without doing anything to change their way of lives. It is not okay to spend your payroll or income on useless things just to be able to say that you have this and that.
That said, do not go on vacations with the “bahala na” attitude. You know, in the hope that manna from heaven will pour upon you one day. Nope, maybe 1% of us can get that lucky. lol …. So if you know you cannot afford it, then don’t be tempted.
You do not have to have everything that’s advertised on tv. Really. 🙂
You know if you like bags so much and you want originals, then visit your local ukay – ukay stores. 🙂 There is nothing wrong with it. I buy from them actually. They are a lot cheaper than buying the brand new ones. ha ha What you save there , goes back to your bank account. That’s a win-win situation right?
5) Budgeting. Make a spreadsheet at the start of every year. Write down January to December. Then below it, write your payables and / or possible expenses. From there, you will know how much money you will have left. That should help you pay off your debts. And help you save more.
Then try the 3 part-way of handling your resources. Like I said, my style was radical. But it worked for us. Maybe it will work for you too.
Stick to your budget. No justification. I promise you, it will pay off one day.
6) Being successful. Accept that blessing gracefully. Say thank you to God as often as you can. Do not let your success go to your head. Remember, God can take away everything with just one click of his hand. So be humble. Help others if you can and when you can.
Our resources are God’s way of helping his children on earth. But never dole out to those who can work. Instead teach them to “fish”, so to speak. I believe that “dole outs” will just teach other people to become parasites. I think we have the responsibility to teach those we can to be more responsible. That’s the only way we can break the cycle of poverty.
It’s only January now. You still have 11 months to fix your finances. 🙂 Good luck and God bless. I hope that my simple tips will help you as much as it did me. The hubby calls me kuripot (stingy to my foreign readers). In my mind, if I can get the same thing at a cheaper price, why not? Whatever I save , will help me buy more properties. That’s my end goal. So maybe, you should set a target this year. And save for it.
Again, happy 2015 everyone! 🙂
Lea C. Walker