Simple Saving Formula
Life is really simple, but we insist on making it complicated. It's the same when it comes to saving money. It all started with a simple saving formula:
INCOME - SAVINGS = EXPENSES
I started applying the formula after learning it from my college professor when I was in my 2nd year. As a self-supporting student which means I need to feed myself, pay my own rent, pay my tuition fee, and with all the other expenses, I must know how to manage my finances well. Maybe, you'll think how come there is savings left, but what I did is I identify the essentials then eliminate the rest. Eliminating the rest means prioritizing your needs over your wants. Same goes with the formula (INCOME - SAVINGS = EXPENSES), we need to get first the portion for savings before the expenses. In my case before, since I started saving without enough income because I'm a working student, I only get 10% of my income as savings then the remaining 90% is for all my expenses.
e.g
| Monthly income | 12,000 |
|---|---|
| Savings | X 10% |
| Monthly savings | 1,200 |
| Multiply by | 12 mos. |
| Yearly savings | 14,400 |
By just getting 10% savings from your monthly income of 12,000, you'll have savings of 1,200 per month multiply by 12 months, so you'll have 14,400 savings in a year. How much more, if you're income, is greater than our example, and that you also allocate a higher percentage for your savings. Come to think of it, would you prefer to have those savings or nothing at all. Just try to compare this figure 14,400 vs 0. Again, the decision lies in your hand.
The expanded formula
When I graduated and got a good job, I started to expand my savings as well as the simple formula that I used to follow. Now the expanded formula is (GIVE.SAVE.SPEND).
GIVE. 10% of my income goes to this portion. I really wanted to give back to where all these blessings came from. I want to give back to God, for without him I am not here enjoying all his gifts. You may give it to the one who strengthens your spiritual aspect. It could be to the church, religious organization, charitable institution, etc. You may also opt to do your own charitable works.
SAVE. From 10% before, I now changed it to 20%. This savings helps me a lot especially this time of the pandemic. It's been almost 3 months of no work no pay. I haven't received any financial aid from the government but I was able to survive. I still can eat the food that I want and be able to help the needy. I adore the ants who store food during sunny days so when rainy days come, they're all ready. Unlike the grasshopper who enjoys so much on a sunny day and ask for help on a rainy day. I don't want to bark to the government on what I lack in this time of crisis. Better save now than tomorrow for tomorrow might not come.
SPEND. The remaining 70% will be you're spending. See, it's still big enough to cover your necessary expenses. In spending, make sure to know your priority. It's just a matter of self-control and discipline. If you have some extra in your expenses, you may put it in your GIVE portion or SAVE portion. It's all up to you.
Stay tuned on my next blog as we will talk about how to build a solid financial structure.
Thank you for reading.😊
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Very informative. Hirap lang sa umpisa, Pero malaki mapupunta savings kahit di namamalayan yung 10% pag tinotal na.
Oo nga po, mas mabuting umpisan agad nang sa kalaunan pwede na i increase 'yong % ng savings. Malaking tulong rin to lalo ngayong panahon ng pandemic.
Anyway, thank you for reading.🙂