How To Start A Savings Habit
February 8, 2002
Habit: a usual way of behaving: something that a person does often in a regular and repeated way. - Merriam/ Webster Dictionary
Thus habit is formed by repeating a certain action over and over again. Either good or bad.
Greetings my dearest readers and BCH lovers. How are you doing so far in the love month? I hope you are all doing great.
Before I continue, let me ask you, do you save regularly? Have you already formed a savings habit? If you do, then that's great and I hope you can also share how you started your savings habit either in the comment below or by writing an article about how you formed your savings habit.
Spending is Habit
Most of us have a spending habit. Perhaps, what you do is, every time you receive your income, whether salary, commission, sales profit, or whatever source(s) of income you have, the first thing you do is pay your bills, buy some things, then if there is some amount left on the next pay date, you save.
I was like that. Sometimes, I even spend all of my money even before the next payday. Therefore, I can not save money this way.
In short, my formula was
Income- Expenses = Savings.
However, I always end up with this formula:
Income- Expenses = Debt.
Why? Because my expenses are always greater than my income.
How to start your savings habit.
Warren Buffet says:
"Don't save what is left after spending; spend what is left after savings."
Meaning, save first before you spend. Or if we rewrite the formula, it should look like this:
Income-savings= expenses.
The common reaction to this is,
"I can't do that, I can barely make ends meet every month. I have bills to pay! My monthly mortgages for my house and brand new car! Plus I have to support my two wives!"
Ok, the first thing to go is the second wife. (No pun intended to those whose religion and culture allows more than one wife).
The solution to that is to simplify your wife... I mean your life! Cut down your expenses to what is necessary first. If you are single this is much easier to do. If you are married, then you have to talk with your partner about your expenses. I might share something about this in the future.
Pay Yourself First.
This means once you receive your salary or income, set aside at least 5%, to begin with. 10% if you can. Then if you are comfortable with 10%, gradually increase it to 20% or even more. If we put in an equation,
100%-20%=80%
Meaning, you live by 80% of your income.
Some of you may be reacting already that this is absurd!
"How can I live off 80% of my income?"
It can be done. I started my saving habit when I was earning only PHP 7,000.00 a month. That's less than $200 a month at that time. How did I do it?
Change of Lifestyle
Yes, you have to change your lifestyle. That's what I did. Fortunately for me, I have no vices anymore at the time. I don't smoke and was sober since 2000. I still drink occasionally, and if it's for free. (Just kidding).
But I have to cut down some unnecessary expenditures. I used to watch a movie every week. I had to stop that. I never subscribed to Netflix or any online services that will not earn me money.
I don't buy designer or branded clothes. Why buy a pair of Levi's jeans when you can buy an ordinary pair of jeans at less than a quarter of the price. Shoes? I never buy a pair of shoes worth more than a thousand pesos ($20). And I don't but often.
Never buy something you can't Afford
Don't buy in credit. If you can't buy in cash, meaning you can't afford it. Unless you are going to use it earn.
I got my Huawei Nova 7SE through a post-paid plan from a telecoms company. I'm paying about PHP 1,700 (about $34) a month including the gadget care. However, I have been using my phone to earn online.
Find Some Side Hustles
There are now a lot of opportunities for side hustles online to augment your income. The read.cash and noise.cash platforms alone are great sources of extra income. In fact, even I am only teaching part-time, I am able to save some of my earnings from these two platforms alone. My earnings from noise go to my savings or I'm HODLing it. I use my earnings from read.cash to pay my phone bill and slowly pay off my debts.
Alternative Method
An alternative method to start your saving habit is doing it daily. Every day, set aside at least PHP 50 a day or $1 a day. I think some members here have this $1 a day challenge. That's a good way to start a savings habit.
In Closing.
Starting a savings requires some changes in how you handle your income and how spend it. It requires some amount of discipline and some changes in your lifestyle. It must start with how you think.
Don't think you can't do it. Think that you can and you will be doing it soon enough.
Thanks for reading.
Image credits
Lead image: Image by Rudy and Peter Skitterians from Pixabay
2nd Image: unsplash
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Reference
Saving Your Future by Xuan Nguyen (c) 2015
Published by www.worldsystembuilder.com
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I just literally made an article about saving hehe. I guess we are on the same page when it comes to saving up. Money is hard-earned. Save before regrets.