Do you still remember the time when you were trying to learn how to read and write? You started with the alphabet, right? That is a form of basic knowledge right there. When we talk about basic knowledge, it is the first set of information in the process of learning and discovering new things.
In budgeting and saving money, knowing the basics is also essential and crucial. Understanding basic financial concepts will help you make better financial decisions whether it’s about saving, investing, borrowing, and even more.
Let us now begin your journey on being financially literate!
First and foremost, acknowledging the importance of saving money is important. Keep in mind that this money is the fruit of your hard work and perseverance that is why you should think more than twice about how and where to spend it. Some of the reasons why saving money is an important thing to do: it helps to protect you from being caught by emergency expenses; it could also help you with your future expenses and achieve your goals.
1. Needs vs wants. Determining the needs and wants may be hard at first, but this will help you a lot in being financially stable. Always consider which are necessities where you should spend your
money. For example, every payday, learn to prioritize buying the essentials such as food, medicines,
transportation allowance, rent fees, and the like. Next, set aside an amount for your savings – make this a habit every month. A 10-20% of your total monthly income could be a good start to put on
your savings.
Try to write down your monthly expenses and categorize them into needs or wants. You can observe that the things that are listed on wants serve only for temporary convenience, or pleasures that are not essentials and could be acquired when you have extra money.
2. Make a budget plan. It is so much easier to monitor your monthly expenses when you track them. List down all the expenses, and the total of your savings every month. This will serve as your monthly
guide to help you manage your money along the way. A budget plan can be adjusted anytime you need to change or modify your expenses.
| Month of April 2021 | |||
| Total earning: PHP 15,000 | |||
| ITEM | BUDGET | EXPENSES | SAVINGS |
– What are the things you want to buy in the future?
– Why do you need to save money?
– How much is your target savings?
– How can you save money?
– When do you plan to start saving your money in the future?
| Specific: What are the things you want to buy or do in the future? | Example: Wedding |
| Measurable: How much is your target savings? | Total: Php 200,000 (Php12,000 - savings per month) |
| Attainable: Where your savings would come from? | Salary and Part-time job |
| Realistic: Why do you need to save money? | To provide a decent and simple wedding for my partner. |
| Time-bound: When do you plan to start saving your money and complete it? Provide exact target date. | Start date: Jun 2021 Completion date: Dec 2022 |
Saving money may seem to be challenging for a lot of Filipinos because there are still more than 51M who are unbanked to date, according to the 2019 BSP Financial Inclusion Survey. This may be a challenging task to do, but we can always try until we can fully learn what will work for us. Aside from the Juan, Two, Threes, there are different ways of saving your hard-earned money. Choose one that will fit your monthly income and expenses, and your lifestyle, too.
Open a savings account. Savings accounts are interest-bearing deposit account that will be held by a bank or any financial institution. Usually, a savings account has maintaining balance, though this is a good option if you want to park your cash for a while and get it anytime for your short-term needs.
GSave
– On the GCash app, click the icon ‘Save Money’
– Register your GSave account, and fill out personal information
– A prompt will show ‘GSave Registration Success’
– You will be redirected to the GSave dashboard
– An SMS will be sent to you from GCash confirming that you have opened a GSave account