Is it possible to have big savings from a limited allowance?
This is a puzzling question that we, millennials, often ask ourselves. Some would openly say, “I think it is possible to save money even from a small allowance.” While some would answer, “Of course not, how could we save money if we are living on a tight budget?” If your answer is yes, good job! You are quite positive and you are ready to grow your fund. But if you say no, you are not alone. For many, their allowance is insufficient to cover even their basic daily expenses.
The good news is, we could grow more funds by properly managing our allowance. Below are my tips to grow more funds from your stipend.
1. Adhere to your Financial Goals.
Setting goals, and sticking to them, is one of the best ways to increase your savings. Goals are more substantial than dreams, and action is needed to turn goals into reality. Your financial goals are your weapon whenever you are tempted to spend more and save less. These could also be your greatest motivator whenever you feel like giving up on saving. Some people forget their financial goals, which is not good. It is advisable to revisit your financial goals every time you put pennies into your savings. Categorize your goals according to their importance. Know the time period and how much you need for each goal. Achieve tangible and realistic goals, and track their progress so you will be encouraged and inspired to save more. So, have you set up your financial goals? And do you revisit them from time to time?
2. Track Down your Expenses.
One common problem among millennials is that they do not have a spending plan to monitor their expenses. You may record all your expenses by downloading a Money Manager mobile application or simply opening an MS excel worksheet, or just writing manually. In creating a spending plan, you have to account for all your expenses, each with a proper account title. For example, account your photocopy expenses into ‘education expenses’ account, your transportation fare into ‘transportation expenses’ account, your groceries into ‘food expenses’ account. Once you are done writing all your expenses, compare the accounts and see which has the highest amount. This represents your highest spending. Once you identify what you spend more on, you will become more conscious of your spending. You will then have to create a strategy to effectively reduce it.
3. Change your Spending Habits.
Learn to reduce your expenses by thinking of a win-win solution.
For example, if your destination is just a short distance away, why not try walking instead of riding a tricycle or a jeepney? Experts advise to walk at least 2 to 2.50 km a day to reduce body fats. It does not only save you money, it also keeps you physically fit.
If you are a person who is most likely to eat in a fast-food restaurant, why not bring a packed lunch instead? Rather than drinking sodas, why not drink water from your tumbler, which is way cheaper and healthier? As you change your spending habits, you will realize that you can save more while benefiting from it. That is a win-win solution.
4. Use the Right Saving Formula.
ALLOWANCE – EXPENSES = SAVINGS. This formula is being used by people who could barely save. We have to save before we spend. As such, the right formula to grow more funds is: ALLOWANCE – SAVINGS = EXPENSES.
5. Create another Source.
If your allowance is limited, then it’s time to think of ways to increase your allowance. Nowadays, online businesses are rampant. You can actually earn money by selling some products online, or putting up a garage sale. You can also earn from your talent, especially when you are good at writing. You can start creating blogs. Just make content on your site/s, generate traffic, and earn from it. Having an additional source of income or allowance will enable you to save more money.
6. Refrain from Vices.
Vices can make your savings disappear in just a snap. Save money instead of spending for vices like cigarettes, liquor, or computer games. Rather than spending money on computer games, why not think of another enjoyable activity which will cost you less like playing basketball with your friends? If you resist spending for your vices, there is a great chance that you will be able to save more money.
7. Bring Only What You Need.
Do not bring your allowance for the entire week or month. Just bring the amount you will need for food or transportation for the day. This will prevent you from overspending.
8. Open a Bank Account.
It is advisable to open a bank account to safeguard your savings, develop the habit of saving, as well as earn (minimal) interest. It will help you to get in touch with your finances and monitor your savings.
Managing one’s allowance properly is such a valuable training for any millennial to take the path of investment and be a millionaire someday. Saving more money can be achieved if you have proper mindset and attitude towards it. Just have the right saving discipline so you can stretch your savings even from a limited stipend.
Challenge yourself to achieve your big financial goals by taking baby steps. Save even a little amount consistently every day. Reduce your expenses and earn more. If spending is a habit, so is saving. Develop that habit, and you will be a millionaire someday.
Echon, Jefferson O.
Jeff is a Cum Laude graduate of Financial Management at the Pamantasan ng Lungsod ng Valenzuela. His passion: writing poems, short stories, and novels serves as an expression of himself. He believes that FINANCIAL EDUCATION is the key to alter one’s financial destiny.