An essential part of the budget is the savings that can be generated from the earnings that go into it.
I will share with you the four steps to boosting savings that Dan Benson wrote in his book, “21 Days to Financial Freedom”.
Step 1 – Give first. If you want to earn more money, you will have to give something away first. New businesses give away free samples of their product. Even new hires will have to work for fifteen days first before they get paid. But the type of giving I am talking of is one wherein you give first, cheerfully, faithfully, wisely and quietly. Giving first is the only investment in the world that has no risk of losing. Its guarantee is stated in the passage, “Give and it will be given to you. A good measure, pressed down, shaken together and running over will be poured into your lap.” (Luke 6:38)
Step 2 – Collect loose change. If change is powerful, all the more is loose change. Coins add up. Small bills add up. But more importantly, the habit of not putting anything to waste, especially the loose change will make for a solid budget. Setting aside Php4 every weekday for 52 weeks will lead to more savings than what Php100,000 kept in a savings account for one year will bring.
Step 3 – Pay yourself first. This simply means that you need to budget savings first before expenses. And do not blindly follow the 10% rule that many say comes from the Bible. The 10% mentioned in the Bible is for tithing that is to be offered to the Lord. A tithe literally means one tenth. The amount of savings will be dictated by what you are saving for.
Step 4 – Manage your debts and expenses. Managing just the inputs of the budget is just half of the task of saving. The other half is to control expenses that eat into the inputs. And if by chance you find yourself wallowing in debt, you can ask for debt condonation, consolidation, refinancing and restructuring. You can also raise cash to help liquidate your debts by selling some of the assets that got you into unnecessary debts in the first place like that massage chair or big screen TV. And accept that the act of selling will be a humbling experience. Finally, and only as a last resort, you can ask for help from your relatives. If they do help you by lending you money, make sure that the loan is covered by a detailed promissory note.
So if you want to strengthen your budget, try the four-step approach to boosting savings.
(Originally written by Efren Ll. Cruz, RFP at http://www.savingstips.com.ph)
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