Friday, October 28, 2016

Saving For a Rainy Day

The average person, in general, have the wrong notion of saving their money. If you belong to the average group, your saving scheme or formula may look like this:

Savings = Salary – Expenditures

I cannot blame most of the society if they see savings this way. After all, almost three quarters of our population earn their keep with just enough to get by on a daily basis.

With this type of saving scheme however, the irregularity will not allow us to really save up to our maximum potential. In fact, the whole notion of saving up for a rainy day is not even a good mantra. Why do we have to save up for rainy days? Does this mean that we have to prepare for the worst all the time? Why cannot we save up for happier days? Take this, for example, our parents and our parent’s parents always taught us to save and prepare for a “disaster”. This is what has been taught for generations. In the end, we usually save just enough money for us to get by in the twilight of our lives.

The first step in correcting our financial problems is to change our mindset in handling money. There are a lot of books, seminars, articles to aid us in this quest to financial freedom. What’s more gratifying are the myriad of financial institutions and banks that are available at our disposal.

First things first, let us change our mentality in saving. Instead of the old formula mentioned above, our saving scheme should look like this:

Expenditures = Salary – Savings

This is a more effective way of saving because it is us who dictate the amount of our savings. This way, we are compelled to really save what we intend to save and not end up with saving just a variable of our monthly income. This may be strange at first if you are not used to it, but it really works. Imagine, have you noticed that, even if your salary increases, you will also notice that your expenditures increase. This is always the trap that befalls people. The moment that their income grows, they think that they can save more. However, since their savings scheme is wrong, they will always end up falling short.

With this “correct” type of saving mentality, mentioned above, our savings are not dictated by our expenditures. Thus we see to it that our savings are like our income, it is fixed. For starters, you have to make a pact to yourself that you will save first and then spend later. Make sure that you are religiously setting aside a part of your salary (make sure it is a fixed amount) every month, no matter how small it is, just stick to the amount that you intend to save. Can you imagine saving 1000 pesos every month? Of course you can!! That is just 12000 pesos a year. It’s doable right? RIGHT! However, trust me, the average employee can’t even save 12000 pesos in 12 months. That’s because of the wrong mindset.

After mastering the first step, be on thee lookout for investing the money that you have saved up. You can go to financial institutions or banks for this. They offer a lot of options for you. It is also a pretty safe option for people who do not want to risk their life savings by investing it in stocks or business.

This is a simpler  approach to investing because you do not have to worry about your money; you let other people worry about it.

To sum it all up, savings and investment should always stem from the person. He should change his or her money blueprint in order to rise above the average notion of savings and getting rich. He should be proactively looking for ways to invest his money wisely by seeking help from reputable financial institutions. This is a commitment that he should keep, just like marriage. There is no such thing as a get rich quick scheme. Just like any successful business and relationships, saving money takes time, patience, and a lot of commitments in order for your money to grow.