BudgetingInvestingMoney MattersSaving

Steps to Successful Saving and Investing

“BIG things come from small beginnings..”

Do you wonder why I started my article with this quote? It is because I want to emphasize that we have a lot of reasons to save and invest. Those reasons are surely “BIG things” so what other ways are we going to start rather than to start with small things.

Why do we need to know the steps to successful saving and investing? I want to share with you the number one reason why I, for one NEED to save. I don’t care how many of you will raise an eyebrow after you read this but I wish to retire at age 45. Hmm, such a BIG dream, right? But, I just believe in another saying that goes, “NOTHING IS IMPOSSIBLE WITH GOD, STRONG DETERMINATION, AND A PROPER PLAN.” Where am I going to get money for my family’s financial needs if I will retire? That is where this milestone being used by financial experts which we can adopt comes in:

A. Plan – B. Budget – C. Pay Debt – D. Save – Invest – F. Give/Donate

            To start with my A. Plan, I wrote my financial goal this way: “I need to retire from the government service at age 45 and be my own boss managing an online marketing business.”

I never do major decisions without seeking advises from more learned people so I approached at least five mentors on how to manage my little income in order to achieve my financial goal (B. Budget) and be successful in saving and investing. As per computation, at age 45, I will be needing more or less than 4 Million Pesos so by that time, I can say I am ready to leave my full-time job. Four Million Pesos?? How on earth can I save for that amount?

So, first things first. Because I am still not debt-free, I should first free myself from financial debts and save (in this case, I chose to do Steps C. Pay Debt and D. Save at the same time.. you can do your own experiments too..) Who says we can’t free ourselves from financial debt? We all did. In fact, I once said, “I will never be freed from financial debt” but once again, “nothing is impossible with faith, determination and proper planning.” Remember the success formula, Income-Savings=Expenses? Our financial debts are under Expenses in this formula and Savings is pre-deducted from our Income. (Tip: In paying debts, prioritize those with higher interest rates.) After paying our debts, we can now start saving MORE. Here are the most important things to save for…

According to experts, every breadwinner should have an 1. EMERGENCY FUND in a form of liquid cash cash ready to be withdrawn in cases of emergency. I know we are all aware of “emergency cases” which include medical situations, accidents, family member loss and job loss. Speaking of emergency funds, these should be equal to six months the value of our total average monthly expenses. For example, your total average monthly expenses are P8,000.00 then multiply it by 6 months which is equal to P48,000.00, then these MUST be the amount on your emergency fund. EMERGENCY FUND is our priority because we might not want to always depend on family, friends, and relatives during emergency cases.

Was I talking like you need to have other types of savings or investments aside from the emergency fund? YES, saving doesn’t just end there. In my situation for example, I will be needing 4 Million Pesos in the future, right? (That would be 19 years from now). So, I need to save for my 2. Short-Term Goals and 3. Long-Term Goals.

In a piece of paper, list down your goals in two columns (Short-Term Goals and Long-Term Goals). I’d give an example: 1. After 3 years from now, I dream to be debt-free. This will be considered as a Short-Term Goal because it is less than 5 years. Example 2: 8 years from now, I dream of having my own house worth P2 Million Pesos. This will be listed in the Long-Term Goal column because its time frame is more than 5 years.

Now, take your time and list all your goals in two columns. ***Remember: Goals should be SMART – Specific, Measurable, Attainable, Realistic and Time-bound. After listing your goals, prioritize and plan on how to attain them. If you need help in planning how to achieve your financial goals, do not hesitate to approach a mentor. I want to take this opportunity to acknowledge those people who serve as my mentors that I am always SPIRITUALLY, PROFESSIONALLY, FINANCIALLY, AND SOCIALLY literate and healthy.

Back to the topic, always be reminded that saving for the Short-term and Long-term Goals need proper planning and budgeting. In saving for our Short Term and Long Term Goals, we can use other investment instruments like health insurance (most common: Philhealth), life insurance (common: for government employees is GSIS which I am sorry to tell, but honestly, I still do not appreciate because of its very low return on investment), educational plans (which we can also avail through investing in Mutual Funds, UITFs, etc.), bonds, real estate, and others.

Finally, let us not forget Step F. Give/Donate which is our way of thanking God for all the blessings and for all the people who gave us the inspiration to save. It may be the last step as portrayed above but it is definitely not the least. Like I said, we can do our own experiment. We might as well want to do Giving along with all the other Steps on our journey to successful saving and investing. Good Luck to all of us!

Are you craving for more information? Please do not hesitate to ask your questions and send them to my e-mail address: charlynjune@gmail.com or add me on Facebook: rjflidua2011@yahoo.com.ph. Please take note that I am also still in the learning process but I can introduce you to some of the more learned people like Sir Floi Wycoco (Google his name). 🙂

photo from: Pixabay

Charlyn June