Liz talked about it, and Joni asked the question: how much do I save every payday?

Aha. It’s timely to talk about this, now that I’m low on fund and about to get my first pay from my new employer. Now, from my old employer, my salary wasn’t that high ((Oh, give me a break; it’s a record low for someone in my field!)), so for the first months, I had a hard time saving. True, most of my money goes to my own expenses, like food…um, books. And whatnot. I especially started running low on funds after Christmas, when I got my entire family gifts. Not that I mind, because it felt nice to give presents that I bought with my own money.

But after Christmas, I knew I should start saving. Not because I wanted to go somewhere, but because I know I should start learning to save. But it’s hard. Most of the times I end up wondering where the money went, when I don’t really buy clothes, shoes or bags. Most of them goes to food, to books, transportation. The others go to my cellphone bill, while a portion goes to my mom and others are to pay off some debts. After paying all the latter, I find myself tightening my belt and praying that the next payday comes soon.

GRAR, why does money go away so fast?!

Sometime around May, Jomar taught me this really cool and practical way to divide whatever money I receive to make sure I have enough for myself, my expenses, my savings and even to give. I’m not sure if he blogged about this already, but let me share it with you anyway.

So, everytime you receive some cash, divide it this way and in this order:

• 10% for Financial Freedom – This division is the one that you should never EVER touch, not until you are ready to invest in a business, or anything else that would make the money you saved here grow.
• 5-10% for Giving – This division is for giving/charity. To church, to whatever charity you are supporting. Yes, this is also important. It’s true that the more you give, the more it comes back to you.
• 10% for Education – This is for anything that you can spend for you to learn something. Jomar’s main suggestion was for learning how to invest in businesses, or how to earn, etc. But I think it could be for other things too, as long as you will be learning from it. Like, say, registering for a dance lesson, or a writing class. Or buying a book about cooking. If you’re taking up a postgraduate class, it could be saved as part of your tuition or for your books. Things like that. Although I think the education part has to be related to the business you have in mind. :D
• 10% for Play – This is important and you should not miss this one. The Play account is where you reward yourself. This is the money you use to buy yourself a book, or clothes, or treat yourself out and such. This has to be spent within three months — so say, you save around P500 every month for play, and you want to have a whole body massage and spa that costs P1500, you save your play account for three months and get that massage. If the thing you want to get costs more than three months of your Play, then it goes to…
• 10% for Long Term Investment – This is for things you want to buy that could not be saved up in three months with the play account. For example, you want to buy a new laptop, you get the money to spend it on the Long Term Investment division. Or like me, for the Sydney trip next year. Note that you don’t save for something you would pay for a credit card. The idea here is what you save for, you pay for it in cash (now that would probably feel so good!).
• And finally, 50-55% for your Expenses – This includes food, transportation, cellphone load/bills, credit card bills, etc. Anything for your expenses that does not fall into any of those up there, it goes here.

So for example, I get Php 1000. I save P100 each for Financial Freedom, Giving, Education, Play and Long Term (that’s P500) and the remaining P500 will be for my other expenses. Get it?

The important parts here are the first and the last one; the four in between can be switched orders. Never forget to save 10% for the Financial Freedom, and save Expenses for last. The important thing is you set aside a part of your earnings for your savings. :) Which is really the point, right? And you must do this for every money that you get, as in every little amount. As what Jomar said, it’s the habit of saving that needs to be developed here. :D

Have I tried this yet? I did, starting May. Although the thing is, I ended up spending the money I saved because of the resignation and the late salary and that I had to shoulder some of the expenses at home ever since my mom flew to Saipan.

Will I follow this again? I will, because it’s an organized way to be able to save money. You know how I like things organized. ;) And I have a pretty good feeling this would really work for me.

Okay, now I can’t wait for payday. Please come soon! How about you? How do you make your savings?