Every year on Labor Day, we pay tribute to hardworking men and women all over the world.
Unfortunately, many of us in the workforce live from paycheck to paycheck, unable to save up for the future.
You may think there's no room for savings now but at some some point in the future, you will look back and regret all the money that you could have set aside.
To avoid this, make a conscious decision to make changes that can help you on the road to building up your savings. With a change in mindset, and some adjustments in your spending and saving habits, it is possible to slowly build up your personal wealth--in between paychecks.
Here are five tips on how you can start doing so while waiting for the next pay raise:
1. Just save.
No matter how small your paycheck is, make sure you set aside an amount each and every payday, before you start using your money. Once you get your paycheck, you should make a deposit to a separate savings account for this purpose, so that you no longer run the risk of using up this money. Physically separating your savings from your “working funds"--whether by having separate wallets or having a different bank account--is a practical step to help you avoid dipping into your savings. Some people refer to this as “paying yourself” since this money goes to your future.
2. Live below your means.
Manage your expenses so that you can make room for savings. Some things you mindlessly do might be eating up to a considerable part of your budget. Daily trips to a coffee shop for hundred peso lattes can pile up. Consider affordable but equally good coffee elsewhere, including the 3-in-1 sachets that you can get in the grocery for a fraction of the cost.
3. Set a budget.
Having a budget is an effective way to manage your expenses and make way for savings, which should be explicitly made part of your budget plan. Make sure this budget is realistic and reflective of your needs--food, utilities, transportation, housing, medication, education, and the like. A good way to keep track of your budget is to use apps or software. Google docs, Evernote, Mint, and a host of other budget tracking apps are available on both IOS and Android.
4. Invest your savings.
Once your savings reach a certain level, say P5,000, put this in a high-yielding investment Your choices can include mutual funds, unit investment trust funds or equities, which are now available to retain investors for low opening account. Try not to leave so much money in low-interest earning accounts, so that you can maximize your earning potential. Of course, you have to be mindful of your risks as well.
5. Grow your income.
One way to boost your savings is to find creative ways to make money, whether through part-time jobs or small business opportunities. Think of what you can do to make this happen--perhaps you can offer tutorial services, bake cookies, or join bazaars. You can also sell insurance plans on the side. The amount you make from these activities will definitely help you supplement your savings.
Although you may feel that you’re walking a tightrope when it comes to your finances, having a can-do attitude is the most important first step you can do in order to build up your personal wealth. This will help you get on the road to saving, no matter how small your paycheck may seem to be.