Today we’re going to talk about how to save money. These laws are actually common sense but seem to have been forgotten by most people – so they never get to save money. Once you know these principles, these laws of saving money, it will be very easy for YOU to save money as well. I’m sure you’re getting excited, so lets get started:
Law #1 – Remember WHY You Want to Save Money
This is all about the purpose of saving money. Most financial advisers would say that it’s to prepare for the future, or to be prepared for emergencies, while a few would answer that it’s for having the money itself. These answers are all valid. But here’s what I believe…
Saving money is NEVER about the money.
Rather, it is about forgoing the ordinary, for the extraordinary.
I remember that back when I was in college I would only eat banana cue for lunch throughout the week so that I can save money to buy a concert ticket of my favorite band.
So if I wanted to see my favorite band in there concert, I had to give up a regular and ordinary lunch and just opt for the banana cue. I was simply forgoing the ordinary lunch for an EXTRAORDINARY experience.
When I started working, I began saving money to treat my girlfriend for a vacation. So I rarely spent money on myself. I rarely ate out or watch movies, never bought any gadgets, or even shoes or clothes.
I was forgoing these ordinary things that young professionals buy for the extraordinary experience that I know my girlfriend would be happy!
This is what I mean when I say that saving money, is NEVER about the money in itself. But it’s your ability to forgo the ordinary, the forgettable stuff, the things that don’t really matter – so you can experience the really extraordinary things in life.
So when you are saving money, NEVER EVER feel bad for yourself. Because it just means you’re saying no to things that are forgettable, in order to experience the things that are unforgettable in life!
So the lesson here really is that before you even start saving money, you need to ask yourself:
“What exactly am I saving for? What is that unforgettable, extraordinary, goal that I will spend the money on later on?”
Is it for financial stability and peace of mind? Is it for a trip to Europe? Is it for the fulfillment of being able to send your kids to the best schools? Maybe it’s to start that business you’ve always wanted to get into!
Whatever your extraordinary goal is, relish in it. Get in touch with it – because it will give you the willpower to say no to the ordinary, in order to have the extraordinary.
Law #2 – You Have to Segment or Separate Your Money
This means that the place, be it the bank account or the physical location where you keep your money, must be completely separated from where your spending money is kept.
Here’s another story: I started saving money for an engagement ring so that I can propose to my girlfriend. I decided to create a bank account and all of the savings for the engagement ring went there. Every peso that went into that account, stayed there for good because it had already been allocated for the engagement proposal. That made the saving process very easy for me.
So for anyone who wants to save, having a separate account just for your savings is a MUST. Otherwise, it would be too difficult to do it mentally. Your payroll and ATM account must be entirely different from your savings account. Again, this is very basic and very simple, but it goes a long way when you’re trying to save money.
Finally, the last law of saving money is:
Law #3 – “Every Centavo Counts”
I will be using my country currency which is PESO in explaining the THIRD LAW
If you want to save P1,000,000 – then it just means you have to save P1, 1,000,000 times! Or save P10, 100,000 times!
What happens most of the time is that people get obsessed over the amount they have. And right of the bat, they say, “Oh no P1,000,000 or P10,000,000 – I can’t save that, it’s too high!” And immediately they give up and don’t save anything at all!
But that’s not the case, if you can save P1. You can save any amount you want to. The process is the same! The things you have to do to save P10 are the same things you have to do to save P100 and are the same for what you have to do to save P1,000 and so on!
Every centavo counts. Every piece of candy, every movie ticket, every meal at a restaurant, every pair of shoes, every time you say “minsan lang”… all of those moments count towards your savings goal.
As you’re hearing Law #3 now, you might be nodding your head saying “Yeah, that makes sense” every centavo counts – But the big question is: What are YOU doing about it?
If you’re able to apply this lesson of making every centavo count – trust me, you’re really going to be surprised at how much and how fast you’ll be able to save money.
And those are the three most important, but sadly forgotten laws of saving money. Lets have a quick review:
The First Law is about the purpose, the reason why you’re saving money. It’s NOT about the money, but it’s about forgoing the ordinary, so you can have the extraordinary.
The Second Law is really a savings technique that you have to separate your savings account from your spending accounts.
The Third Law is the practice of saving every centavo because it counts towards your savings goals.
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