SAVING THROUGH ENVELOPES

I developed my saving habit through dividing my money to different categories in 5 white envelopes labelled accordingly.

To make it to the next pay cut, alive. This has been the slogan of many, and I must admit that it used to be mine as well. It makes me laugh now thinking about how difficult it was for me, a single young professional, to actually manage time, activities and money. I had fewer responsibilities back then yet I felt I just had to do a lot of things before I’m 30. All the gadget sales, travel bazaars and low cost fares, food pornography and all the rest of the seemingly interesting things my generation invented to reduce boredom. I just had to try it all. It was good in the beginning. It helped me realized my potentials but eventually, it made me felt more limited. By the end of every month, I always checked my bank account, and somehow, I felt inadequate. My first instinct was really to work harder, performing my best and competing with myself each year. The more earnings, the more things, and the more savings. Little did I know that savings is irrelevant to earnings when cost of living grows with the same or higher percentage of increase in salary. To make that simpler, savings is nil value regardless of earnings if income minus expense is zero.

Earlier this year, a game changer hit me hard on my face. I changed jobs and industry which means my almost 6 years of experience in the Financial Market will be of little value to my current role. What’s good about my new job though is it teaches me so much more about life, health and the balance of everything. So finally, I decided to change my strategy. I felt the need to know exactly how I can use my resources well and practice discipline in savings.

There were two things that influenced me the most to come up with this amazing technique. The first one was the OTWOL TV Series which aired in ABS-CBN earlier this year where I saw the main character “Leah” dividing all her earnings and putting them in different parts of her room. By dividing it, she knows exactly how much remains for her daily needs. It taught me to prioritize.

The second influence I had was my tithing. Our church encourages us to put our tithes in an envelope and prepare it ahead of time. This taught me to set aside part of my income monthly.

With these 2 influences, I developed my saving habit through dividing my money to different categories in 5 white envelopes labelled accordingly as Tithes, Utilities, Savings, Generosity and Weekly Budget. The first 2 are quite easy to calculate since tithing is 10% of everything you have and utility bills has a range from previous months’ payments which you can use to estimate the recurring amount. For savings, I would really recommend to put at least 20% of your income because lower than that will be too little and you might end up forgetting about it, but higher than that might depress you in the long run which might abruptly cut your discipline. The envelope labelled as “Generosity” can be fluctuating in amount but it doesn’t mean you cannot control it. This is the part of your income set apart to share your blessings and helping others who are in need. It might not apply to all but for Filipinos, this is very common especially for those who support their family and relatives. Set aside 2-5% every month so that when the need arise, it can easily be picked up. Lastly, which for me was the hardest yet most interesting envelope is the Weekly Budget. This one will take some time to estimate since you will need to observe yourself for atleast 3 weeks and come up with a summary of all your expenses like food and groceries, transportation, movie tickets and toiletries. I would really recommend the use of MS Office Excel or the iOS Numbers as this is easier to track and offers alot of formula which makes computing accurate and easier plus you can save it daily and track all your expenses by the end of the 3rd week. Once you were able to track it all, you have to check which of the expenses looks too much and which one you can reduce immediately.

This is a sample breakdown I used.

1)       Tithing - 10%

2)       Savings - 20%

3)       Utility - 8 %

4)       Generosity - 13%

5)       Weekly Budget - 45%

Now if you sum this, it is just 96% which means another 4% is freed up which of course will add to savings. The good news is, this is just a start up point and you can always check and reduce your weekly budget to your own tolerable level. Just always remember that savings is not about your earnings. It is more about your spending and spending is a habit which is not necessarily a need base event. Break your habit by limiting your resources and knowing exactly how much you have left to survive the week without compromising your priorities. So what are you waiting for? Start today and expect that savings account to grow fruitfully.

CONTRIBUTOR'S CORNER:

Our savvy saver writer for Saving Through Envelopes is Mariel Plaza.

Mariel considers herself belonging to the XYZ generation taking values from different decades which remains relevant to this present time. She is an advocate of empowering women and promotes walking as a tool to reduce traffic in her country tag-lined as #SweatWithOurNation in her Instagram account. 

She and her cousin will be hosting an event this Aug 13 to encourage confidence in every mother in her home barangay.