The new year is a chance to restart and rethink your money habits. Whether it’s for a big life event coming up (your child’s first birthday party, for instance), an investment, or for financial security, saving money is a crucial habit to get into. And there’s no better time to start saving than now!
How to save money in 2020
Want to save money but don’t know where to start? We’ve gathered the best pieces of advice from money-savvy moms and financial experts to help you out.
1. Figure out how much you can save.
Before you can start saving, you first need to know how much you can afford to set aside. But don’t try to manage it alone — if you have a husband or partner, it’s important for you two to discuss your money situation.
“Start by assessing your current financial situation: any debt you have, how much is coming in each month vs. how much you’re spending, upcoming expenses, and long-term saving goals,” says Vera Hanson, a Stash communications representative, in an interview with Real Simple.
ADVERTISEMENT - CONTINUE READING BELOWBy doing this, you can look into cutting down expenses in some areas of the household and saving the difference. For example, you might think of unsubscribing from your cable subscription if you favor streaming services.
2. Start small.
Don’t think that you’ll just save whatever is left at the end of the month — you’ll most likely end up spending it all. “Just save something— and save that something every week,” advises Farnoosh Torabi, author and financial expert, in an interview with Goop
If you want to invest money, but don’t want to take a big risk, starting small also applies. Celebrity mom Sharon Cuneta suggests putting it in a time deposit account. “Kung nanjan lang ‘yung extra money mo. Kaysa papasok ka sa negosyo na hindi mo naiintindihan at sinusugal mo [ang pera mo]," she shares.
3. Use the envelope system so you can maintain your budget.
CONTINUE READING BELOWwatch nowAn envelope system, popularized by financial guru Dave Ramsey, is a popular budgeting method for saving money and paying bills. It helps you set aside what you need for bills while sticking to a personal budget.
Madeline “Madz” Ellado, a stay-at-home mom and a member of our Facebook group, Smart Parenting Village, uses a version of the envelope system to keep her family’s expenses and savings in check. She purchased a money organizer from Lazada and labeled each pocket accordingly.
The money Madz stores in the organizer is good for 15 days. She deposits the savings in a bank account.PHOTO BY courtesy of Madeline ElladoADVERTISEMENT - CONTINUE READING BELOWMadz adds that while most of their bills’ due dates fall every 15th of the month, she also sets aside half of the needed amount for some of the bills that are due at the end of each month. “Para pag dating ng due date hindi na mabigat sa bulsa,” she shares.
Madz allots Php2,000 for their savings per month, but she also tries to save an additional Php2,000 to Php3,000 every end of the month.
4. Try different saving techniques and find what works for you.
The 52-weeks money challenge went viral in the Philippines in 2014 after mom Rhea Mocorro of Kuripot Pinay posted her version online. By the end of the year, she managed to save more than Php60,000.
The challenge works by setting aside a certain amount of money for the first week and then doubling the amount you save as the weeks go by. Your goal is to keep doubling the amount until the last week of the year.
ADVERTISEMENT - CONTINUE READING BELOWFor example, Rhea started with Php50 in the first week of January. She doubled that amount to Php100 and set that aside, so her total savings were at Php150. For the third week, she set aside Php300 and continued doubling the amount until she reached Php68,900 by the end of the year.
You can modify the amount you start with that is convenient for your budget. Or you can try other ways to save money that will suit your personality. The important thing is to keep this formula in mind: Income – Savings = Expenses.
According to Wealth Coach and motivational speaker Chinkee Tan, this formula is proven and tested to achieving financial freedom. If you use this formula, you’ll get to control your expenses and your budget if you prioritize savings.
5. Open a separate bank account for savings.
“If you don’t divide your savings into separate specific accounts, there is a bigger chance that you will spend funds that are allocated for another purpose,” explains bank manager Eleanor So in a previous SmartParenting.com.ph article. “Having separate accounts will give you a clearer picture of how much you really have, how far along you are from your financial goal for a [particular] account, and if you are able to stay within budget.
ADVERTISEMENT - CONTINUE READING BELOWIf you are saving money for your child, open a new account under his name. Rose Fres Fausto, a former investment banker and financial literacy speaker, shares in the book Letters to My Children that she and her husband opened savings accounts for each of their three sons when they were born. This is where they deposited ang paos and other cash gifts that their children received in the accounts to avoid “commingling of funds.”
Whatever way you choose to save, remember that willingness and discipline play a major part in your success. Have a clear set of goals and work your way toward that goal. You can do it!
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