Did you know that the Philippines has one of the lowest savings rates in Southeast Asia? According to a Bangko Sentral ng Pilipinas survey in 2014, only 1 in 4 Filipino households has savings.
This is worrying, as it means that in the event of an emergency or sickness, majority of Filipinos have no means to fund their needs. This also implies that they could fall into debt or worse, not be able to cover their emergency needs.
What keeps most Filipinos from saving? Unfortunately there is no one answer. It's been argued that the Filipinos’ fatalistic or easy-go-lucky attitude prevent many from getting into the savings habit. There is also the lack of discipline and commitment to stay on the savings path. After all, building up savings starts with giving up a portion of your regular income and having the discipline to do this continuously, while resisting the urge to dip into these funds for whimsical reasons.
Let’s look at the 5 most common reasons cited by Filipinos for not saving, and, if it applies to you, we also share the steps you can take to address this.
Reason #1: Not having enough money left for savings. This is the most common reason cited by people for not saving. However, if you take this as an excuse, then you will never be able to save at all. The first commandment in personal finance is: Pay Yourself First. Make it a habit to save first before spending the rest of your income. You have to be disciplined and bite the bullet if need be, giving up some expenses in order to make way for savings.
Reason #2: Leaving things to fate. Trusting that destiny will take care of our finances is one of the most dangerous things that you can do. Although it may appear that things sometimes straighten themselves out, the truth is that you have to do your part to make sure that you have some savings left. When you've figured out how much you can regularly save, make arrangements to have a savings account you cannot easily access, and make sure you put funds into this account regularly. Being proactive in building up your savings is always safer than simply leaving things to fate.
Reason #3: Not knowing how to save. No diploma required to learn how to save - just your commitment to improve your financial situation. There is a wide range of savings accounts or instruments today, depending on your time horizon and risk appetite. Consult a financial professional on the options that are available for you. Getting started on the savings route can be hard, and staying on it too. But look towards the future and the peace of mind having a nest egg can bring, and that's your best motivation.
Reason #4: Being buried in debt. Those who have loans to pay often argue that they could not save because they have to pay off their loans first. However, this mindset will keep you from being able to save any money at all, especially if you have a huge loan to pay off. Even as you set aside funds to pay for your debt, do set aside an amount that would go into your savings. This ensures that you will not find yourself unprotected should an emergency happen.
Reason #5: It's too late for me. It's never too late, and for that matter, never too early either. To save, it is important to plan for how you will save and to make it a part of your budget. This is why it is important to have a budget that will guide you with your spending, and that will help you to minimize extraneous expenses, hopefully to have more money to add to your savings. This entails planning what to spend for in advance, and setting realistic limits for yourself. Having a simple spreadsheet or a list will help you keep your budget in check.
Saving is the first step towards ensuring your financial health. This is why you have to put an end to the endless excuses and get into the savings habit now. Try not to think of saving as a chore and don’t think of it as something you can do in the future when you have more money. Remember, the money you save now ensures a more secure future for you and the people you love.
Grow Your Money is an editorial partnership between News.abs-cbn.com and Citi Philippines to promote financial education and provide helpful information to Filipinos on how to better manage their personal finances.
Visit www.citibank.com.ph for more information.