That Thing called 'Saving'

We have been conducting a survey mostly for young professionals ages between 20-29, a whooping 93% believe that they don't have enough savings and investments which is really not a shock. But even with this high percentage of lack of savings, people don't seem to care at all which is quite alarming. 

Most people can only think of "SAVING" if there is extra cash which is unlikely to happen since we always seem to have something to spend on. And we seem to fall short on the description of saving, people say I'm 'saving' --- to buy a new phone, to go to Sagada, to treat myself on my birthday, etc. That's not saving, that's planned spending! 

Though it's a good thing not spending on impulse, but it defeats the purpose of the true value of saving. Our financial goal should not only be limited to short term goals, we must focus more on our long term goals - retirement fund, kid's education, emergency fund, etc. 

 Here are simple ways on how you can start saving:

1. Pay Yourself First 

Once you received your income have the discipline to set aside a portion of it for savings before you pay your bills, buy groceries, watch movies, etc. Before you pay SM, VECO, Globe, the first bill to pay should be yourself. It won't be as easy as it sounds, but just try it and eventually it will become a habit. 

For beginners, you can start off with The Money Jay System.

2. Increase Cash Flow

From the survey that we have conducted, the no.1 reason why people cannot start saving because there is no money left to save. Find ways where you can make extra money, it can be something you like to do - baking, cooking, online selling, etc. there are a lot of opportunities now in the internet. Or you can do a part-time job or be a freelancer. 

If you are looking for a part-time job as a financial adviser, click this link. It's a great opportunity to learn how to manage your finances at the same time you can earn extra. You can learn and earn at the same time.

3. Manage your Expenses

Learn how to budget your expenses, cut unnecessary spending as much as possible and you'll be surprise how a little amount can be make a difference in your financial situation. 

For example, if you can ride a jeepney instead of a taxi everyday going to work then do it. Let's say you can save P100/day for taking a jeepney so P100 x 30 days = that's P3,000 a month. You do the math!

Even cutting-off drinking Coke can every meal, let's say you save P50 each day that's P1,500 (P50.00 x 30days) each month and P18,000.00 a year.

4. Invest in Financial Education

Saving is not just setting aside money, it's a habit. No course is offered in school to teach you how to properly manage your income, I am an accountant by profession and we have a lot of finance courses but nothing about personal finance. One of our mentor, Rex Mendoza, the former CEO of PhilAm Life said "For accounting and finance graduates, you study to learn how to manage other people/company's financial statement, have you check your personal financial statement?"

If you are financially literate, you will know that there are a lot of ways to save - the right way and the wrong way. Let's use our previous example by saving P50 per day by cutting off Coke in your daily expense,  you will be able to save P18,000 per year and within 5 years time that's P90,000! 

But if you are financially educated and you know where to grow your money at 10% per year, that would P109,892 in 5 years.

And if you are planning for a long-term saving, cutting off P50 per day in 10 years, that's P396,765. It's not really about how much money you earn, it's how much you keep consistently.

Financial literacy doesn't happen overnight, it is a process that would help us achieve financial freedom. There are a lot of books, online articles, and magazines that you can read nowadays; and there are financial seminars being offered around the country too. If you really want to start growing your finances, I highly suggest that you invest in knowledge first.

If you want to learn more, answer this FREE SURVEY to assess your financial situation today. 

The Rat Race Cycle

Are you busy getting rich or are you just busy?

When we were young, we were repeatedly told to study hard to earn good grades, so that we can find a good paying job and earn income. And then the vicious cycle begins.

Can you see yourself in this financial struggle? You work more than 8 hours a day to get paid so you can pay your bills and buy things you think you need but end up broke with no savings even before the next pay date so you use your credit card or loan from a friend to pay the excess then work again. It's seems to be endless! Now you are trapped in the Rat Race Cycle. 

Most of us are in this situation right now, same as our parents and even grandparents. But what exactly is this Rat Race Cycle? Wikipedia defines Rat Race as an endless, self-defeating or pointless pursuit. Can you picture out a lab rat trying to escape while running around a wheel? That's exactly the same thing for you in terms of finances, you keep on running - you work very hard for money; but still end up with nothing - no investments, no retirement fund, and no savings.

Here are some common reasons why we are trapped in this vicious cycle.

1. Pamana/Inheritence 

We got this mindset from our parents, our parents' parents and so on. We were told to study hard and work hard to have a good paying job, we have that "Employee Mindset" implanted in our brain as long as we have a job we will be fine. 

2. Instant Gratification

Almost everything nowadays are instant - we have instant foods we can cook in just a minute, instant messaging where you can send and receive messages in seconds, and even instant relationship no more traditional courting. And because we are now living in a fast changing world; we like to have what we want right now, not later but now because we don't want to wait.

3. High Responsibility

Juggling with a lot of responsibilities from utility bills, kid's education, parents or wife's allowances, house rental, insurances, groceries and many more, you can't seem to think of other options but to work and work more just to keep up with the growing expenses.

4. Loving the Feeling

We all want to be rich, who wouldn't? You just can't help buying the latest gadgets and shopping for branded bags especially when it's on sale because you love the feeling of having luxurious items and how it feels like to be rich and being envied by many.

5. Comfort Zone

Many people are resistant to change, they just want to stay where they are comfortable even if it's not doing them any good. They are comfortable with their jobs because that's the only thing they know they are good at. 

6. Lack of Financial Education

Whenever the topic about financial education is discussed, most of us shrug it off and change the topic to more interesting stuffs like showbiz or basketball games. Most people think the learning the concept is only applicable to the businessmen or rich people, when in fact, we all need it especially those who want to be rich.

7. Lack of Action

No matter how many books you have read and seminars you have attended about money matters, it won't work unless you take action. Bo Sanchez, one of our mentor, had mentioned that the block that is hindering you to achieve your goals in life is "Education without Execution".

There's actually nothing wrong with working, buying things that you want, or treating yourself and your family with a grand vacation, as long as you are living within your means. You have to learn how to control your spending habit and plan out your saving habit. You need to properly manage your income so that you can control your money before money controls you. 

To learn more about money habits, click on the link below to answer a free survey to know your current financial situation.

http://bit.ly/1oqJcOw

Money Jar Management System

A lot of us wants to save but only a few can really do it, though some tried to start saving but end up with spending everything. I have a question, if you are going to SPEND your P100.00 pesos today, is it a big amount or small amount? Let's say you want to buy Starbucks to treat yourself, is it enough? But what if you are going to SAVE your P100.00 pesos just for today, is it a big amount or small amount?

I bet most of you answered that P100.00 is a small amount to spend today, you can hardly buy a Starbucks or it wouldn't be enough to treat yourself for the day. But P100.00 to save for 1 day is quite a big amount, isn't it? Why is that so? It's because our formula of savings is 

INCOME - EXPENSES = SAVINGS

That is why your P100.00 is a big amount to save because you still have a lot of expenses in mind. The correct formula is

INCOME - SAVINGS = EXPENSES

Remember to always pay yourself first. Not by spending your money paying Jollibee, SM Department Store, Samsung, and Krispy Kreme, but you need to invest in yourself for your future. Learn to apply the saying "Sacrifice now, enjoy later". I know it's easier said than done especially to those who are not used to setting aside money, but I tell you it's better to start now or regret later. 

Here is a simple way to start saving by applying the Money Jar Management System, it's really simple and doable but the hard part is you have to discipline yourself. It's not the amount of money you save that matters, it's how you consistently save money because saving is a habit.

For starters, you can use empty jars or bottles at home and label them accordingly. Once you are able to build the habit of saving then you can open a bank account for each of the following:

*Note: Percentage inputted is applicable for starters, you can change the percentage according to your preference. You can choose which account you want to prioritize first, it doesn't have to be all of them you can start with 3-5 jars.

1. I Always Have Money Account - Set aside 1% of your income and you will not withdraw the money you put here for the rest of your life. When you feel broke or when you are broke, you cannot say "I don't have any money!" so you won't attract the negatives because you have this account. Simply applying the Law of Attraction. 

2. Financial Liberation Account - Set aside 5% of your income and invest it in an instrument that will give you passive income. (i.e. Mutual Funds, Stocks, Business Passive Income such as Royalty Income) This implies that you start investing your income where it can grow without you doing anything.

3. Abundant Spending Account - Set aside 3% of your income. Decide on the level or amount of money that when reached, you will spend all the money in this account for only ONE day. I call this my 'Reward Jar' and this is my favorite jar too, you won't feel guilty spending this because that's the purpose of it. 

4. Yearly Income Account -  Compute what amount of money you need to last yourself for a year. Put 3% of your income in this amount with the intention of reaching that total yearly income you targeted. This is also called "Emergency Fund Jar" if you have not started with your emergency fund then you can apply this.

5. Tithing Account - Always set aside 10% (fixed) of your income and donate it to the organization or person from where you derive spiritual guidance from. Thank God for everything that He has given us and return to Him a portion of what we received. 

6. Giving Account - Set Aside 3% of your income for giving to others. I always believe that whatever you give will come back to you a thousand folds. 

OTHER ACCOUNTS

7. Dream Car/House/Business - Set aside a portion of your income for your dream car, house or future business.

8. Wisdom Account - Set aside a portion of your income that you will use for improving yourself. If you want to learn or buy a book to increase your knowledge (i.e Education).

9. Peace of Mind Account - Set aside a portion of your income to wipe out your debts. If you have overdue balance in your credit card account and can't seem to pay it all at once then you can use this account.

10. I'm Always in Love Account - Set aside a portion of your income for love pursuits. If you are in a relationship you can use this for your dates, gifts, anniversaries and whatever you two are planning for your future to grow your relationship. For single, you can use this to love yourself more - go out and explore, who says being single is boring?

Introduction - What is a Money Jar?

The word 'save' or 'saving' is really not new to us, most of us when we were kids used to have a coin or piggy bank in all sorts of colors and shapes - like Mr. Piggy Bank, Mr. Bamboo and Mr. Pringles. We excitedly insert a coin and when we hear that "ting"sound, we ask for another coin or get the coin back and insert it again. When it gets full (thanks to our parents) we smash Mr. Piggy and happily buy something we want for Christmas or birthday. 

If you were able to continue this until now, then I congratulate you for keeping it up. But if not, then  I congratulate you too because you are thinking of saving again. Do you know that there is a right way of saving and a wrong way of saving? It's not just about putting loose coins, it's about how you manage your money and how to make it a habit.

The Money Jars are just simple ways on how to help you to get started through the money management system. Unlike the piggy bank system where you put all your money in one (1) place, money jars system would require more than 3 jars depending on what you need. Each money jar has a purpose which will be discussed in this blog. It's not just setting aside money but you have to know the purpose, how to make it a habit and have the correct mindset to build not only your savings but more importantly your wealth.