Why We Should Force Ourselves to Save?

There are many reasons why we need to save. Perhaps our current salary or income is just enough for our day to day needs. But you have a dream of driving that brand new car you saw at the showroom or aiming to reach your dream destinations. You probably want to start a business and you need fund for your startup.

For these and other reasons, it is imperative that we start saving. Otherwise, all these dreams will remain a dream and we will find ourselves after 5 or 10 years still struggling to make ends meet because we failed to start saving.

In my previous article, I have shared the possibility of saving more even if we have a small salary or income. We just need to be mindful of our actions at all times. Setting a goal is the very first thing that we need to do and keep an eye on it.

Don’t let distractions take you away from your goal.

The Concept of Forced Saving

As opposed to voluntary saving, forced saving is an obligation that you need to comply. It is comparable to a bill that we are mandated to pay. It is a commitment and an investment in one. Anyone can adopt this method of savings to secure their future.

Various Ways to Implement Forced Saving

Oftentimes, being consistent is a challenging task. We always have a reason or two for not being able to save. It seems that there are always a hindrance that comes along whenever we start the saving journey. Here are some of various saving strategies that are worth considering:

Automate Your Savings

Whether you are an employee receiving a regular monthly or bi-monthly salary or a freelance worker or a business individual, you can start automating your savings.  The first thing to do is to create a separate account. Every time the salary is credited to your account, the specified amount will be automatically transferred to your separate account. This way, you will no longer get hold of the money as it will be directly credited to your separate account.

In the current times as digital banking sweeps the online world, we can now do online the things we usually do with our physical banks. When it comes to savings automation, it is very much possible with our online banking apps. E-wallets such as G-Cash are also great way to start an automated savings.

Save With a Group

There are things that are better done with a group. Such as saving. If you have a friend or group of friends, you can build a team with a goal of saving a certain amount in a specified time. Each group member will commit that they will save a certain amount every month or every pay day. It’s up to you create your own rules as long as it will be fun. If your friends are competitive, they will make a way to increase their savings. The success of your friends will help you achieve your own savings goal.

Open a Retirement Savings Program With Your Bank

The earlier you start to save for your retirement, the better. As the name suggests, this savings plan is intended for your retirement. The monthly contribution is based on how many years you are planning to retire.

You can have your own retirement savings or you can open a retirement plan account with a trusted financial institution in your country.

You may refer to this retirement calculator to know how you should save monthly in order to reach your goal or desired monthly benefit.

Open an MP2 Account

A Modified Pagibig Program or more commonly known as MP2 is a voluntary savings program offered by the Pagibig fund to its members. This program has a 5-year maturity which give higher dividend rate compared to banks and other financial institutions. Current members, retirees and pensioners who were former members of Pagibig can join the program.

Though it is a voluntary savings program, we can consider it as a forced saving method. The program is voluntary in the sense that we can deposit any amount not less than 500 pesos. We are not require to deposit on a monthly basis. We can consider it a forced savings since our money is locked for 5 years. Meaning, we cannot withdraw the money until the maturity date.

The good thing about it is the higher dividend rate which we can opt to withdraw every year we can wait until the 5 years. The dividend shall be added to our principal which will be the basis of the computation of the dividend for the next year. The MP2 is implementing the power of compounded interest.

How I Started With MP2

I have been a member of Pagibig for 17 years. But it’s only last year that I decided to start my saving journey with MP2. I started by creating an online account so I can monitor my progress. I opted for personal payment rather than having it deducted from my salary. Whenever I have extra amount, I would automatically deposit it with Pagibig.

As of now, I am continuously growing my savings through my online wallet such as GCash and PayMaya.

I am hoping to reach at 1 million by the end of its term.

On the final thought...

I hope this post could encourage others to force themselves to save.  Even if we may have a small salary, it does not necessarily mean that could no longer save. It's a matter of disciplining ourselves and having a commitment that we may be able to achieve our goals.

Disclaimer:

The content of this post are based purely from my own experience and should not be considered a financial advice. Similarly, the opinions I have shared are of my own and does not in any way represent the organization I am currently connected with.

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