It doesn't appear like it, but my finances went downhill in 2022. I want to avoid delving into details but the savings I worked on for 2 or 3 years was wiped out because of an unfortunate incident. I was scammed and am still hopeful that my hard-earned money will be returned in 2023. This made me appreciate the fact that I saved money for rainy days. If I didn't do that, I wouldn't know how to get out of that 6-digit mess. Yup, I was able to save that much.
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| Photo by Towfiqu barbhuiya on Unsplash |
This being said, I will continue saving money this 2023. But before that, let me share with you how I was able to save money these past years with the hope that you will be inspired to save, too. It only needs the right amount of discipline, sacrifice, and determination.
Saving Through a Savings Account
For years, and even up to now, I've been saving my gig earnings in my bank account. It's the most basic thing to do for me since my paycheck goes directly to that account. But since I only get to earn less than 1% per annum, I didn't put all my eggs in that basket. I also put money in digital banks that had higher interest rates.
For example, one digital bank offered up to 4% interest for a limited time so I opened an account and deposited a part of my savings from my traditional bank to my digital bank account. After the promo period, the interest rate went down to 2.5% per annum which is still higher than my traditional bank so I did not withdraw my money and let it grow there. I also continued to deposit at least 500 pesos per payday to that account.
Currently, I have three digital bank accounts that I opened because of the handsome annual interest rates. These three are all legitimate digital banks recognized by the Banko Sentral and have PDIC insurance for deposits up to 500 thousand pesos. Since they have different annual interest rates, I also deposit different amounts depending on my savings goal for each account. I use a savings calculator to know how much I will need to deposit a month to reach my year-end savings goal. This tool I'm using is pretty straightforward and easy to use so I hope you can check it out, too.
Saving Through Stocks and Mutual Funds
Just a quick disclaimer: I do not do stock trading. My husband and I have been investing in Philippine stocks and mutual funds for more than a decade now and we are what they call long-term investors. This means that we earn through compounded interest. Back in 2012 when we started, we signed up with Bro. Bo Sanchez's Truly Rich Club where we learned how to do long-term stock investments and mutual fund investments. We only buy and sell shares when we hit a specific target.
The global pandemic hit the stock market hard and our stock portfolio has not been looking pretty for months now. But since we're long-term investors and have shares from blue chip and stable stocks, we know that it will pick up soon. So we only buy in moderation (because now is the best time to buy!) and will be patiently waiting for the stock prices to rise in a year or two.
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| Photo by Austin Distel on Unsplash |
Saving Through a Sinking Fund
In 2021, I thought of teaching my niece and single friends how to save money for their dream gadgets through a sinking fund. A sinking fund is one of the best ways to start saving because it is goal driven and very flexible. Through it, I was able to save money for birthday gifts for my mom and the boys, for our vacation, and even for holiday gifts.
Here's how it is done...
First, set a goal by answering the question, "What am I saving for?" That time, I wanted to save some pocket money for my birthday getaway in June.
Then, know how long you will be saving and how much you will be saving. This will give you the amount that you will need to deposit weekly/monthly into your sinking fund. We started in January so it gave me 5 months to start saving the 20 thousand peso pocket money that I wanted. That meant I had to save 4K a month so I had to deposit 2 thousand pesos every payday.
Lastly, decide how you will keep your savings. Not everyone has the discipline to save on their own and wait for the right time to withdraw their sinking fund. At least my niece and our friends knew they couldn't do that on their own so they entrusted me with their sinking fund. I used one of my digital bank accounts as our piggy bank. In the end, everyone was able to reach their sinking fund goals.
Sinking funds are good for short-term saving goals and it helps develop your financial maturity and discipline until you get used to saving regularly for big saving goals like your retirement. By the way, there's also a Retirement Planning Calculator that I used so I know how much I need to save for my retirement.
Saving money is never easy especially when you have bills and other expenses lined up. Still, I try to save as much as I can so that I can have a personal emergency fund that I can use for instances such as the "mess" I was into last year. I hope I was able to encourage you to do the same with this post.
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