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How to Save and Manage Your Salary Every Payday

Majority of us are living from paycheck to paycheck, and usually we think it’s all because our income is never enough. It may be true, but one of the most underlying reasons is we simply don’t know how to save and manage our finances well.


The following rules are very basic yet they’re time and again tested and proven to really work:


1. Consider savings as an expense.


How do you come up with savings every month? Normally, it’s income less expenses equals savings. Though this is a classic formula, there’s a downside. Your expenses can eat up all your income until you have nothing else to save. What you do, though, is to tweak the equation a little: income less savings equals expenses.


What’s the good thing about the last equation? You’ll force yourself to have more control over how much you spend for food, entertainment, and other miscellaneous expenses.


How much should you save? The suggestion is to save at least 25 percent of your monthly income. However, a lot of us will find it hard to do so. Thus, it’s all right to begin with very small amounts, say 500 pesos or a thousand. The most important thing is you have savings to speak of. You can just increase the amount over time and whenever you feel comfortable.


2. Pay your bills first. It’s a common mistake among many. I for one am guilty of this once in a while. But you need to make it a habit to pay all your bills as soon as you receive the salary. This way, you don’t get slapped with late fees and other penalties. Of course, you wouldn’t have a mounting debt later on.


Note: You can forgo saving if you need more for your debts. In fact, if you can, pay more than what’s required of you to reduce your interest repayments and shorten your debt term.


3. Invest. You don’t need to be extremely rich before you start investing. One of the basic things you can do is to open a savings account in a bank. It’s common for your account to earn interest as long as you don’t let your balance fall below the minimum. You can also put your money on a time deposit account. Some local banks allow you to do that for as little as 20,000.


If you have saved a considerable amount of cash, you can invest on mutual funds and even stocks. You can approach companies such as Sun Life and Manulife to help you out.


4. Avoid using your credit card as much as possible. If you can pay it in cash, then do so. A credit card is still a form of debt, which you have to pay later. Worse, it earns interest, which can accumulate over time especially if you’re fond of paying just the minimum due amount. Furthermore, if you miss your repayment, you end up paying a lot more.


I am sincerely hoping that with the tips above, you’ll learn to enjoy your hard-earned salary more.

by:  Milafel Hope Dacanay

CBSi Content Management Digital PR Head, writer, blogger and freelancer



Image: Keerati / FreeDigitalPhotos.net

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