People save money for a lot of different reasons. Some set aside part of their salary each month simply to be able to foot the bill for their daily necessities, while others save money because they want to be prepared for the unexpected expenses that may come their way. This could come in the form a debilitating injury or illness, an unexpected loss of one’s livelihood, or even a natural disaster that wreaks havoc on one’s tangible properties.
Still, others save money for their future goals. Some would like to be able to spend big on a dream holiday abroad, while others save so that they can send their children to school when they’re older. Others set money aside to be able to save for their future house, while others do so in order to invest in other types of capital, whether it’s shares of stocks or valuable pieces of art.
The gist is that people save money with different objectives in mind. And the good news for any would-be saver is that there is an equally varied number ways to achieve these goals. In this guide, we’ll put a spotlight on some of the strategies that you can try out for yourself. Read on to learn more!
Open an ATM Savings Account
The simplest way for anyone to start their financial journey is by opening an ATM savings account. This type of bank account affords you the convenience of having somewhere to channel the income you receive each month, while also ensuring that your money remains liquid, meaning it’s readily accessible for all your spending needs.
Financial experts even recommend opening several bank accounts, particularly if you have specific individual goals when it comes to saving money. For example, if you’re trying to build an emergency fund, you’re going to have to set aside at least 6 months’ worth of living expenses. This will be a whole lot easier to do if you have a separate bank account where you can park your money—and one that you can easily access should an emergency arise.
If you’re someone who loves to travel, it’s also a good idea to have a separate bank account where you can set aside money for your future travel needs. This way, it will be easier to track where your money is going, and the portion of your income that you need to set aside for your daily expenses and your emergency fund will not be in danger of being used up inadvertently for your travel expenses.
At Robinsons Bank, it’s very easy to open an ATM savings account. You simply need to be 18 years of age, and you just have to submit the needed documentary requirements, including a filled out application form, 2 valid identification cards, a 1×1 ID photo, proof of your billing address, and proof of income. A Robinsons Bank ATM savings account also has a low opening and maintaining balance of just PHP2,000, making it easy for you to keep your account active even if your income is relatively low.
Open a Time Deposit Account
If you want your savings to generate a little more interest than a standard bank account, and you can afford to leave your money parked for a specific period of time, then also consider opening a time deposit account where you can keep a portion of your money.
A time deposit account works great as an alternative to a standard bank account because it allows you to let your money gain higher yields without exposing yourself to investment risks. You see, when you open a time deposit account, you are guaranteed to get back the principal amount you deposited, plus any earnings on interest once the deposit matures. This is in contrast to many other types of investments, where the current value of your money can depend on present market conditions.
Like ordinary savings accounts, a time deposit account is also insured by the Philippine Deposit Insurance Corporation (PDIC) up to PHP 500,000, further reducing risk on your part. However, do take note that time deposits have specific periods of maturity that range from less than a year to five years. This means you won’t be able to withdraw your money within the specified time period without incurring penalties. However, this setup is actually ideal if your goal is to keep your money untouched within the tenure you choose.
If, for example, you’re trying to save money that you can use as a down payment for a real estate purchase in 5 years, then opening a time deposit account will allow you to earn a little bit of interest while at the same time preserving the face value of your money and protecting it from the effects of market downswings.
At Robinsons Bank, you can open a peso time deposit account with a short-term (less than 1 year) or long-term (1, 3, or 5 years) maturity. The latter requires a minimum placement of PHP 50,000, while short-term time deposits only need PHP 1,000 as minimum placement. Speak with one of our agents today to discuss the terms that best suit your requirements.
Invest in a Mutual Fund or UITF
If you have already apportioned part of your money to investment instruments that are less risky like a time deposit, then it’s time to also consider investing some of your income in a mutual fund or unit investment trust fund. Putting a portion of your money in such funds will allow you to take advantage of higher yields over the long term.
When you buy a mutual fund or a unit investment trust fund, your money goes to a pool of money collected from numerous other investors. This money is then invested in a range of securities, including stocks or equities, bonds, money market instruments, and other assets. The main difference between the two is that with a mutual fund, you’ll own shares of the mutual fund and will become a shareholder in the mutual fund company; with a UITF, you will instead own units of the fund.
The good thing about investing in a mutual fund or a UITF is that such funds are professionally overseen by experienced fund managers. This way, if you don’t have the time to pore over the merits and disadvantages of investing in individual securities or assets, you’ll have an easier time investing your money.
At Robinsons Bank, we offer a range of treasury, trust, and investment products that you can custom-fit to manage your investment goals and requirements. Get in touch with our agents today to learn more.
Identify an Ideal Monthly Budget
It’s a good idea to outline how much you’re spending each month by itemizing the things you usually pay for. Once you have this list, you’ll be able to see better how your spending actually stacks up against how much you’re earning. Perhaps you’re spending way too much taking rides from a transport network vehicle service when you could take the bus or train instead. Perhaps you could lay off the junk food and focus instead on buying food products that are healthy and nourishing. From there, you can set a monthly budget that’s actually much more in line with your spending power.
Commit to Setting Aside a Specific Amount Each Month
It’s good idea to set up a monthly budget that’s more in touch with your actual purchasing capacity, but you shouldn’t stop there. It’s also important to commit to setting aside a certain percentage of your income each month. The rule of thumb is to save at least 20 percent of what you earn and to invest it in instruments that will allow you to grow your wealth over time. You can certainly save a higher percentage of your income, which should benefit you even further. Remember, the equation should be “income minus savings equals expenses” instead of “income minus expenses equals savings.”
It’s also advisable to automate the deductions you intend to make on your income each month. Your bank can help you automatically transfer money to accounts of your own choosing. This way, there’s no danger of you being tempted to spend that money elsewhere.
Find Ways to Cut Back on Nonessential Spending
When you finally get your hands on your salary after a fortnight or a whole month of working, it’s easy to get tempted to spend blindly on things you don’t actually need. After all, you deserve to treat yourself, right? Well of course you do, but that doesn’t mean you have to get carried away either!
In fact, cutting back on nonessential spending is something you can do all the time. Brew your own coffee instead of buying that PHP200 cup of joe from the fancy shop. Eat out only a few times a month, and instead, commit to cooking most of your food at home. And if you already have 50 t-shirts in your closet, do you actually need to buy another one from your favorite fast fashion store? Buying clothes you need is not only unstainable and bad for the environment, it’s bad for your wallet too!
Spend to Save Money
On other occasions, you actually have to spend to be able to save more in the long run. That additional cash that you need to shell out to buy an air conditioner or refrigerator unit that uses inverter technology? That’s going to recoup itself through the energy savings you’ll be able to make over months of using the appliance. That additional thousand pesos that you have to sacrifice in order to buy a nice pair of genuine leather shoes instead of the pair made of low-quality polyurethane? That’s going to pay for itself eventually since the better pair of shoes are likely to last longer. There are many other essential items that you can definitely spend a bit more on to be able to save money. Don’t cheap out now and deal with the financial consequences later.
Be Smart in Using Your Credit Cards
Properly using a credit card can be great for building your credit history and proving your creditworthiness, opening you up to better loan opportunities with your bank in the future. For example, by being a responsible credit card user, it is very likely that it will be much easier for you to get approved for future loans with lower interest rates.
As such, it is important to get a credit card only if you can commit to making sensible purchases with it. Use it to take advantage of installment payments on big-ticket purchases that you can use to make more money. For example, purchasing a computer with a credit card makes sense if you’re going to use it for your freelance projects.
It’s also advisable to take advantage of rewards whenever you can. For instance, by using a cashback or rewards credit to pay for your groceries, you’ll be able to get rebates or accumulate points that you can use to pay for other essential purchases. Just make sure to keep up with your credit card payments each month to avoid racking up costly penalty fees and interests that will only bury you in bad debt.
Defer Expensive Purchases Until You’re Sure You Need It
If you desire something so bad that you just can’t take your mind off it, resist the temptation and put off purchasing it until about after a month. Whether it’s a new office backpack, a new pair of shoes, a new coat, or a new smartphone, just hold your horses and wait until you’re absolutely sure you want and need it.
A lot of times, the urge to buy something new and expensive will pass after you put it off your mind long enough. Waiting a while will also help you evaluate the intended purchase better, allowing you to assess whether or not it’s really worth spending on.
Give Up on Your Expensive Hobbies
Finally, take a closer look at your current hobbies to gain a better perspective on just how much they are affecting your ability to save. If you’re drinking and smoking way too much, for example, consider cutting back on the amount of alcohol and tobacco products that you buy. This will also help you avoid the health and financial repercussions that could affect you later in life.
Similarly, if you’re fond of collecting expensive items that don’t appreciate in value over time, you might want to re-evaluate whether or not it’s worth continuing the hobby. After all, there’s nothing worse than realizing that you want to leave a hobby but also finding out that your collectibles are now only worth a fraction of what they originally cost you.
Saving money and making it grow can be challenging, but it’s certainly not impossible. Follow the no-nonsense tips above to get started today!