I have been working for the past three years and to be honest I feel like nothing is happening to me --- financially. Yes, my investment is there and yes, I have means to get extra money but savings-wise I am doomed. Its so hard to save money.
I think about money all the time. Whether about post ideas on SavingsPinay or my personal financial goals and next actions. I just want to Get My Finances In Order Before 2016 Ends. Good thing the post I created will always remind me of that.
I also realized that I spend too much time thinking about saving money but I honestly have no idea what am I saving for. Do you have the same struggle? And so I thought I'll create a list of The Different Saving Funds You Should Own. Let me know in the comment section below which fund you want to start saving, which fund you are currently saving for and which fund you've already accomplished.
1. EMERGENCY FUND
This is just a non-negotiable fund to be honest. Without a cash cushion for emergency situation you'll be left behind. People who have prioritized their emergency fund first and foremost will suffer less money-related stress. They will feel much secured of what tomorrow will come.
How Much Do You Need?
Prepare at least 3-6 months worth of your income. You can also start with a Baby Emergency Fund taken from Dave Ramsey's Total Money Makeover. The Baby Emergency is equal to $1000 or for Pinoys it could be just a month worth of your salary.
How Can You Save For an Emergency Fund?
Try saving a good 10% of your salary every month. Automatically transfer this to a separate savings account which you bound not to touch unless a financial shock happens.
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2. DEBT-PAYMENT FUND
This applies directly if you suffer from personal debt, credit-card debt and/or loans. You need to allot a portion of your salary as a a debt-payment fund. Make sure that you pay your debts so you can use the money to better your finances in the future. I am fortunate to have not incurred any debt at the moment so my net worth is quite positive. However, I should still take precaution financially.
How Much Do You Need?
This depends of the method you choose to pay your debts. The Debt-Snowball Method is one of the most recommended ways for you to pay successfully. This method suggests paying the least of your debt with the least amount you can pay. It focus on slowly but surely debt-management.
How Can You Save For a Debt-Payment Fund?
This should be the number 1 priority in all of your saving funds. Maximize the amount you pay for your debts than the amount you save. As soon as you are debt free then focus all your money in building your cash reserve. If possible try to come up ways to earn extra money either online or through a small business.
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3. INVESTMENT FUND
As early as now aim to have your first ever investment. Investing will definitely change your life for the better. It is your first big step in creating a passive income or making money work for you and not the other way around.
How Much Do You Need?
This will depend on the type of investment you want. Nowadays a good 5000pesos to 10,000pesos is enough for an initial investment on traditional investment vehicle like mutual fund or direct stock market. You can also save more money as soon as you start diversifying your investments.
How Can You Save for an Investment Fund?
Cut-back on your unnecessary expenses and slowly move the money you save on your Investment Fund. You can also use any cash bonus you receive or maybe your separation fee or 13th month fee for this.
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4. PERSONAL SAVINGS FUND
Personal savings fund will enable you to achieve all your short-term financial goals such as budget for travel, buying a new car and/or updating your wardrobe. This is for your personal wants that cost more than the regular "wants". The key is to make sure that your first three funds are funded enough so you won't feel sudden guilt financially.
How Much Do You Need?
This depends of which short-term financial goal you want to achieve first. I for example is saving for an international trip on the first quarter of 2017. I am aiming for 25,000pesos as my travel budget. With this I have to save at least 3,500pesos a month. Adjust your budget accordingly so you won't be in any unwanted debt.
How Can You Save for a Personal Savings Fund?
Again you have to make sure that you have funded your Emergency, Debt-Payment and Investment Funds first before transferring any amount to this fund. Priorities, remember?! Now having an extra income will help you tremendously to build your Personal Savings Fund without hurting your budget. There are many proven ways you can diversify your income. You just need to be really "madiskarte".
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5. RETIREMENT FUND
You will never be young forever so you better start thinking about your retirement too. A lot may ask what age a retirement fund should be started and the definitely answer would be as soon as possible. Saving for your retirement will enable you to enjoy your harvest season. The earlier you start more your money will grow.
How Much Do You Need?
Nowadays you just can't entrust your retirement fund to government-issued policies like SSS, GSIS (for government workers), PhilHealth and PAG-Ibig. You won't survive with the inflation rate and the cost of living. If you want to retire happy you need to start saving accordingly. Start by saving money on a quarterly or yearly basis. Commit to a certain amount you can fund. Then add whenever you are financially equipped.
How Can You Save for a Retirement Fund?
Saving for retirement should start as soon as you have your first income. If and then you can't afford then try to develop the habit of paying yourself first either from any of the above Different Saving Funds You Should Own.
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Overall
To end this article I just want to share to you this quote I saw from the internet. This is my current desktop wallpaper since whenever I read it I feel really motivated. I hope that this same quote will inspire you financially to make today count. Do not feel discouraged instead keep going. Don't ever dare to think about quitting.
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