Crushing the One-Day Millionaire Mentality
Saving money takes discipline and hard work. It's no wonder so many Filipinos claim saving money is their number one financial struggle.
Very few people have emergency savings stashed somewhere. If you're part of this minority and are putting money away each payday, congratulations! You're one step closer to laying the groundwork for a financially-stable future.
Take caution, though. Just because you're a good saver doesn't mean you're doing everything right. There's always room for improvement, especially when it comes to spending and saving.
Money mistakes can happen to anyone, even if you think you're being smart with your finances. To finally get rid of that one-day millionaire mentality, especially during payday, we've listed some money mistakes even good savers make. Hopefully, these will help you prepare for your future and any emergency.
Saving Only the Surplus
The Risk: So you pay your bills, enjoy a night out with friends, and maybe make a few "fun" purchases, too, then you move whatever's left in your payroll account to savings. The good news is you're doing something to save money.
The problem with this strategy, however, is that when you save only the surplus or the money you didn't touch, you may start thinking you have more money to spend, even when you don't. Because you feel more confident about the balance, you won't mind going out and spending more.
Try Instead: Pay yourself first. No, we don't mean getting a new pair of Air Jordans or some other shoe. The first bill you should settle every month is your savings bill. Of course, this is only after paying the regular monthly bills.
To put this strategy in place, set up an automatic transfer feature from your payroll account to your savings and schedule it every payday or whenever you like. If you "set it and forget it," you'll be amazed by how quickly your savings can grow.
Linking Your Payroll and Savings Account
The Risk: You save money regularly, which is great! Linking your accounts is definitely convenient. However, because the money is easy to get to, you risk dipping into your savings when money runs short or when you need to fund an impulse purchase.
Try Instead: While it's good to keep part of your savings in an account that's easily accessible, especially during emergencies, it can be a smart idea to keep the rest in a separate, "untouchable" account or stash. If you have to go somewhere or need to do several tasks just to get that money, you'll likely be deterred from spending on a whim. This is great, especially if you're an impulse buyer. The harder it is to get your hands on the money, the more easily you get dissuaded into spending it.
Saving Big Chunks Only When You Feel It
The Risk: If you're the kind who only saves big amounts whenever you feel like it, you may be going for an all-or-nothing approach. You get a thrill out of saving a significant amount, but you also tend to borrow back that money thinking it won't make a dent.
Try Instead: Steady is always better. Come up a defined amount for how much you plan to save each month and keep to it, rather than guessing. Have a savings goal and strive for it. You can always change it if you think you can regularly save more.
Saving money is always a good idea, and finding ways to become better at it will only lead to good things. As Warren Buffet once said, "Someone's sitting in the shade today because someone planted a tree a long time ago." Save smarter, plant your tree, and watch it go into full bloom.