The Secret Formula In Saving Money

Before investing, you might be saying to yourself, "How can I invest in stocks and mutual funds if I don't have money to invest in the first place?!"  Lucky for me because when I learned about various investment instruments, I already have savings in the bank that I accumulated over the past 8 years. 

My problem was lack of financial intelligence.  But now, things have changed....Going back, how can a salaried employee be able to set aside money for savings and investments? 

The answer is discipline.  Yes, one has to be disciplined even in saving money.  Let me explain how I did it by going through the stages of my financial wisdom:

First stage:  Live Today as if There's No Tomorrow! (21 - 24 years old)

Second Stage:  Traditional Saver in Banks (25 - 29 years old)

Third Stage:  Beginning of my Financial Wisdom (30 years old onwards)

My stages do not end there.  In  fact, it has only begun.  I know that it will  lead to ten or even  twenty stages.  That's ok, I'm willing to wait for my rich financial harvest.  

Let me discuss each stage.

First stage:  Live Today as if There's No Tomorrow!

During my first stage, I was fresh out of college and started working in a big corporation.  Like most young and single women, I spent all my monthly salaries on shopping and night outs! I even asked money from my parents if I don't have any left until the next "sweldo."

It was a vicious cycle for 3 years.  Even if I tried to save some money, I always end up withdrawing my meager savings.  

Second Stage:  Traditional Saver in Banks

After those years, I began to realize that I need to set aside money since I have been working for more than 3 years without a single peso in the bank!

So I finally opened an optimum savings account in EPCI (merged with BDO now).  And I deposited  in that account whenever I have money left. 

My deposits were irregular since I spend  or buy first before saving.  This was also a time when I invested in  SMC Stocks through salary deduction.

Third Stage:  Beginning of my Financial Wisdom

The next stage is the beginning of my financial wisdom.  And it took me 9 years of work experience before achieving this. 

This is how I invest now.  I deposit post-dated checks in 2 mutual fund companies monthly.  I already gave my PDCs to those companies so I do not have control over them anymore.  The amount is equivalent to 10% 

Most of us use this is the formula in saving money:

INCOME - EXPENSES = SAVINGS

This should be our new, winning formula:

INCOME - SAVINGS = EXPENSES

Like what Francisco Colayco says, "Pay yourself first."  This means to set aside X% for your savings and investments before paying off your bills. 

 

My PDCs in mutual funds are pre-planned so whether I like it or not, I have to set aside 10% for that type of investment.  Believe me, it's hard specially when you have bills to pay but you need to be disciplined in your action.  My mindset is that the investment is for me and my family's future. 

Aside from using post-dated checks, you may also utilize salary auto-deduction.  Many banks offer this.  Remember that you must not be able to touch that money so it goes directly to the bank.  Just to make sure that you won't be "tempted" to withdraw and spend. 

Never put your savings in an ATM account.  It will turn into an emergency  account rather than an investment account. The less access you have, the better it is for you.

As for me, my next goal is to increase it next year.  I will update you in my future posts  if this has become  a reality.