It's a typical mindset for some of us that you can only save "if I get salary increase", "if I get promoted", "if I work in a big company" etc. etc. I had the same mindset before. That's why after working for almost eleven years in the Philippines, still I got no saving. I wish I met someone like Warren Buffet at the start of my working career.
So how can you start saving your money?
By following the 70/30 rule. Period.
What is 70/30 Rule?
It means that every time you receive your salary, you will sit first and divide it into the following account:
1. 70%- This means that your budget for monthly expenses shall be taken from the 70% of your monthly salary. Example, if you receive a monthly salary of Php15,000.00, the allotted budget for your expenses shall be Php10,500.00 (Php15,000.00 x 70%).
2. 30%- The remaining Php4,500.00 (Php15,000.00 x 30%) shall be divided into three (3) categories: tithes (10%); long term investment (10%) and savings (10%).
Tithes- this portion you shall be given to the church you belong to.
Long Term Investment- this portion shall be put into a savings account for the purpose of investment (traditional business or paper assets)
Savings- this portion shall be put into a savings account. This account shall be use for "emergency purposes".
It's not about how much you receive; it's about the habit of saving.
When I learned this principle in 2010, I struggled a lot in implementing it because I have lots of loan to be paid and yet I applied the habit. At first, I couldn't follow exactly the 70/30 rule. I applied what was applicable with my financial condition that time. I started the 90/10 allocation, then later I was able to pay most of my loan until such time when I was able to apply the 70/30 rule. Trust me it really works.
Now, do a favor for yourself. Apply the 70/30 rule on your next payday!
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