The Importance of Saving MoneyMarch 30, 2020
Over time that I’ve been blogging and chasing financial freedom I learned that saving money is far more important than any other concept available.
Learning how to save means valuing all your hard-earned money and becoming aware of what your priorities should be.
Here are three (3) reasons why saving money is important.
Reason 1. Saving Money makes you sleep peacefully at night.
If you don’t have reserved money you will end up becoming afraid of what tomorrow will bring.
Without enough savings you’ll pretty much worry how to survive the coming work week. Once you set yourself on having a proper savings by living within your means or taking other extra steps, your financial stress will diminish.
Picture a life wherein you continually save for your goals, wherein you have a prepared savings account for your future children’s education and wherein you are regularly investing in your retirement?
I bet you’ll have the best sleep every night.
The developing COVID-19 situation teaches us some valuable lessons about life. How much we need to save money. Those without an emergency fund prepared, will find themselves worrying how to put ends meet.
And so, the most important thing people can do now is to make sure they have an emergency fund in place.
Emergency Fund is composed of 3-6 months worth of your monthly income.
For example, if your monthly income is 10, 000 a month then you need to be able to save at least 30,000-60,000 pesos for your emergency fund.
An emergency fund is supposed to make sure that you still have enough money to continue your daily lifestyle for the next 3-6 months or until you get a stable source of income.
Be sure that your emergency fund is accessible!
Put it in a short-term savings vehicle or any savings account that it will be safe yet can be withdrawn easily if something unexpected happens.
The work-from-home setup opens opportunities for us to save more money.
Place the money you should have spent on transportation, lunch, snacks and random dine-out sessions on your emergency fund.
And you don’t have to worry because everything now is digital.
Now that we are under enhanced community quarantine, I recommend looking into your bank’s online banking solution.
Online Banking allows clients access to their account and empowers them to make transactions via the internet even without visiting the physical bank. You can manage your account, pay bills, apply for another account and more at the comfort of your home.
For example, BDO, although they remain available in specific branches, encourages their clients to encourage the heightened use of online banking service to protect the public from the spread of the pandemic.
“We urge our online banking users to share and teach their family and friends how to sign up and use BDO Online Banking so they can bank safely from home,” the Bank said in a statement.
BDO has provided steps to guide its customers on how to sign-up for online banking.
Personally, the money I spent on transportation alone is around Php 4000 a month. Not to mention the lunch, snacks and random dine out session. With us still under the enhanced community quarantine, I am saving almost Php 6,000. And I commit to transfer this amount less the budget for grocery to my savings using the online facility available.
Reason 2. Saving Money will empower you to make better financial decisions.
Having proper savings will empower you to make financial decisions that will better out your life.
The more money you have, the more options you'll be getting.
If you are not happy anymore in your present career then you can easily decide to file a resignation for you have enough emergency fund to use for your expenses. You can now slowly build your dream house, dream car and dream vacation. You can aim higher in life and have a greater chance of achieving each goal you create.
Reason 3. Saving Money can give you the option to invest and earn passive income
A powerful way to start acting for financial freedom is to Save and Invest.
Saving is the process of putting cash/money and parking it in a safe place and can be accessed easily when needed.
Investing is using money as a capital to buy an asset in which you strongly believe will bring a better return of investment or in other words will make you richer.
First, save enough money as your contingency fund a.k.a. Emergency Fund. From then slowly save again another amount but this time ride an investment vehicle that satisfies your financial goals. You can choose a mutual fund, direct stock investment or put up your online business as your very first investment.
If you regularly save and invest then there is a better chance that you can retire at an early age. The accumulated interest that your savings and investments will earn can be the very money that will be working for you which describes what passive income is.
Again, start as early as possible because the earlier your start the larger your money can get through compounding.
Final Note from SavingsPinay
So what are you waiting for?! Save Now and Enjoy the life that you have been dreaming of later.
Always assess your priorities and try to live within your means. If you’ve been procrastinating on your financial situation then you might want to think again.
Saving Money is more than just having a reserve amount. It means prioritizing yourself! The essence of saving money is to pay yourself first.
Remember the formula Income minus Savings equals Expenses.
The moment you see your money on the ATM Payroll, dedicate 10-20% for your savings. Use online banking and make it automatic!
Don’t even delay this step as temptations occur faster than expected!
Izza of SavingsPinay helps Filipinos bridge the financial literacy gap one content at a time by providing insights and tips on budgeting, saving, investing, side hustle and growing your net worth. Aside from this blog she also writes at www.izzaglinofull.com, a beauty and lifestyle blog for frugal Pinays and manages, www.izzagevents.com, a wedding and event business since 2011. For inquiries, topic suggestions or future collaborations email her at firstname.lastname@example.org