Savings – MindNation Blog

Contrary to popular belief, good financial well-being is not achieved by simply having a lot of money in the bank. For Mariel Bitanga of Simply Finance, a boutique financial planning firm committed to empowering Filipino women, having adequate savings is a good start but it’s also important to regard personal finance holistically. This means saving and spending your money properly, borrowing wisely, and setting clear financial goals. “Good financial health is all about balancing each of these pillars,” she advises.

Mariel provides more specific tips below:

Have a savings plan. Saving your money is good, but don’t fall into the trap of becoming an over-saver, or someone who constantly puts away money — and just leaves them there. While over-saving is an admirable practice on the surface and is better than over-spending, it’s better to invest your savings in money market accounts or mutual funds so that the money grows in value over time.

Another way to maximize your savings is to split them up into different accounts, each with its own purpose. “By opening multiple savings accounts, it becomes easier for you to identify financial goals and make sure you are on track to achieving them,” she says.

Stick to a budget. The basic rule of managing your expenses is to make sure you are not spending more than you earn. This does not mean, however, that you should forego buying your ‘wants,’ be they make-up, fashion, toys, travel, etc. “Buying these are fine on occasion,” Mariel assures. “Just make sure you spend more on the things that are important to you and less on items that are not as important.”

Borrow wisely. “It’s perfectly okay to have debt, but don’t take out a loan to buy frivolous things or because you are in competition with someone else’s standard of living,” Mariel advises. “If you must borrow money, do it to purchase things that will increase in value over time, like a house loan or to further your education.”

“It’s perfectly okay to have debt, but don’t take out a loan to buy frivolous things or because you are in competition with someone else’s standard of living.”
Mariel Bitanga of Simply Finance

Furthermore, don’t forget to scrutinize the terms of the loan carefully before finalizing the deal. “Read the fine print, because some companies charge a higher interest rate after a certain number of years,” Mariel says. “Also check if the monthly repayments fit your budget or if they will bleed you dry. Lastly, make sure that the person or institution that you are borrowing from is licensed and legitimate so that you do not get scammed.”

Plan for the future. “Setting financial goals does not have to be intricate,” Mariel assures. “You can plan for as short as six months to as long as five years, although I recommend that you review your plan every year or even every quarter so that you can adjust accordingly.” For those who are wary of making plans because of the pandemic, Mariel counters that today’s uncertain times make financial planning even more important. “The more you don’t know what’s going to happen, the more you should have a roadmap that shows you where you see your money going, how you can optimize it, or even how you can attack debt, so that in case the situation worsens you at least have something to guide you.”
Talk about personal finance with as many people as possible. Exchange personal best practices with peers and family members, not just with a financial adviser or financial planner. And rest assured that you do not have to be a financial expert to broach the topic with others. “The concepts about personal finance — such as saving and spending — are all very basic, simple, and what many of us already know to a certain extent,” Mariel shares. “Conversations about financial health need to be normalized. The less the topic is taboo, the more people can help each other to make smarter decisions about money.”

MindNation WellBeing Coaches can help you build better money management habits so that you can save, spend, borrow, and plan your money wisely. Message https://bit.ly/mn-chat  so you can book a teletherapy session now.

We all know that it’s important to save money for the future. Surprisingly, the easiest way to accomplish this is to actually split up your savings into different accounts instead of just maintaining a single one.

“By opening multiple savings accounts, it becomes easier for you to identify financial goals and make sure you are on track to achieving them,” says Mariel Bitanga, financial advisor and founder of Simply Finance, a boutique financial planning firm committed to empowering Filipinos.

While managing more than one account may seem time-consuming, Mariel assures that the benefits outweigh the extra work required. Splitting up your money into different categories makes you more aware of where your salary is going. “When you know what’s happening to your money, you make better purchasing decisions and can adjust your financial goals accordingly.”

Mariel adds that people now have the benefit of living in the Digital Age. “Opening a bank account is much easier to do now than before,” she explains. “There are so many digital banks now where you can open an account online without even having to talk to anyone. Most banks even have a feature where you can open sub-accounts under one account, so you can manage your money conveniently.”

Small earnings should not be a deterrent either; you can still split up your savings. “Put in small amounts here and there just to get started,” Mariel advises. “When your money is small, it’s easier for you to keep track of them and manage them; the key is to build the habit so that when you have more money, you’re still able to budget wisely.”

When your financial life becomes more organized, you will become less anxious about your personal finances, make better money decisions, and enjoy better health.

“When you know what’s happening to your money, you make better purchasing decisions and can adjust your financial goals accordingly.”
Mariel Bitanga, Financial Advisor and Founder of Simply Finance

Types of savings

There is no hard rule about how many accounts a person should have. “It depends on your personal situation, so always reflect on what’s suitable for your lifestyle and what you want to achieve,” Mariel points out. That being said, here are the six types of savings that she recommends:

Emergency fund

As the name suggests, you only touch this money when a true emergency arises, such as job losses or other disasters that you need a lot of money to cover like major home repairs, car repairs, or even pet-related emergencies.

If you have dipped into your emergency fund because of the COVID-19 pandemic and do not have the income to replenish it yet, it may be time to think of ways to cover the loss. “Consider other ways you can make more money, such as taking on a second job or starting a side business, so that you do not deplete your emergency fund,” Mariel advises.

Retirement fund

This ensures that you will still have enough money to pay for your bills and expenses when you are no longer working. Start putting money into this fund even when you are still young; the earlier you start, the more opportunities you will have to grow those savings through investments. Consult a financial advisor on what opportunities are available for you.

Personal savings for day to day and regular expenses
Since you can’t touch your emergency or retirement funds, this is where you should get your cash for your food, utility bills, and other essentials.

As with the other types of savings on this list, the amount you should have in your personal savings depends on your lifestyle and needs. You can calculate this by adding up your monthly contribution to your retirement and emergency fund, and then subtracting these from your income. From what remains, make a commitment to set aside a reasonable amount that still allows you to have enough to meet your daily expenses.

Expenses for short-term goals

This is for expenses that require you to save up a little more than usual before you can spend them, such as a wedding, a downpayment for a car or gadget, or a vacation.

Hospital and medical expenses

This is money intended to cover a medical emergency, specifically something that might not be covered by health insurance. Even if you are young and at the peak of health, it would be wise to start setting aside money for this fund now. “We need to approach things responsibly especially now that we are in a pandemic,” Mariel says. “As human beings, it is inevitable that we or our loved ones will encounter medical emergencies or expenses at some point in our lives, so the smart thing to do is to have money set aside to cover those because they are really one of the first things that can deplete our investments and savings.”

Optional: A fund for hobbies and other “wants.”
“Wants” are defined as things that you buy for fun or leisure; you could live without them, but you enjoy your life more when you have them. These include expenses such as collectibles, games, or beauty treatments. If you see that you regularly spend a considerable amount on these items, consider setting aside money to exclusively fund these so you still spend with care.

How to get started

This is definitely not an exhaustive list of all the types of savings accounts that you could set up, but it is a great starting point. When you are ready, Mariel suggests that you start by making a list of all the categories mentioned above, as well as other categories that you think you need to budget for. After that, check all your current bank accounts and tally them up so see how much money you have to start with. Finally, start allocating to the various funds. Financial advisors can also help in this regard.

For those still feeling unsure and overwhelmed, MindNation WellBeing Coaches are also available 24/7 to help you build better money habits. Book a session now through https://bit.ly/mn-chat or email [email protected].