Mark Zuckerberg, Warren Buffett, and oil magnate T. Boone Pickens are just some of the billionaires who are known to live frugally. What could we be doing wrong?
Last year, CNN Philippines cited a World Bank report that revealed something about Filipinos and their saving habits: that 69 percent of us don’t really have something stored in a bank account.
The report furthered that the rate of Filipinos without bank accounts was higher than the global average of 38 percent and East Asia and Pacific average of 31 percent.
Most Filipinos cite low income and high expenses as the culprit behind their lack of a savings account—but in reality, this shouldn’t be a hindrance to save. If the wealthy can do it, you can too. Learn more about the saving habits of the rich and pick up a thing or two tips along the way.
Look at the small picture
When we make big-ticket purchases, we tend to plan them carefully and make sure we do it right. However, we do the direct opposite whenever we make smaller expenses: We do it impulsively.
The next thing we know, those small expenses have snowballed into a big amount, and we get nothing in return. If only you’ve saved the money you spent on the little things, you may have a bigger amount by now—you realize later on.
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To avoid this, you need to have the proper mindset with regard to smaller expenses: over time, those little but frequent spending grows to a bigger amount.
If you can hold off some expenses, especially if they’re not necessary, then you may just want to save them up for another day. As financial adviser Suze Orman eloquently put it: “Look everywhere you can to cut a little bit from your expenses. It will all add up to a meaningful sum.”
Pay in cash instead of credit card
Swiping your credit card is an easy and convenient way to pay everything, especially if don’t like carrying cash with you. However, using your plastic can be a tricky deal and you might end up being overly dependent on it. Remember, it’s hard to claw your way out of debt once the interests start to kick in.
Alan Corey, author of A Million Bucks by 30, has a suggestion for people who love paying with credit cards: pay with cash and ditch the plastic. “”That way, I’m forced to stay on a budget without counting pennies and saving receipts. I can spend only what is in my wallet. I turn it into a game where each week, I reduce my ATM withdrawal amount by $20 to determine how low I can really go.” Whatever you can save from not swiping, you can put it in your bank account.
Think how uncertain the future is
Primarily, the goal of saving is always for the future. However, some people do not see it as important. They easily lose track of their goals and stumble back into their old spendthrift ways. If this has been your case, then maybe you need to have a vision of what the future might be: uncertain and lackluster.
According to Snehashree Bhat of Most Inside, thinking how bleak the future may be for your finances will do the trick, especially when you think about your old age and having lost the ability to work. “You need divert your focus from present to future because future is uncertain. In present you are capable of working and earning money but you may not have this vigor in your old age.”
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Save no matter how small the amount is
When people think of saving, they always think of bigger inputs for bigger gains. However, this unhealthy mindset constrains people from doing one thing successful people do: Keeping money no matter how small it is. By seeing the importance of even the smallest denomination possible, all they do is save, save, and save.
Mike Rox of WiseBread says that people should save no matter what the amount is. “Before you go into a savings plan, recognize that saving money is often just one small step at a time. In fact, financial advisors will tell you that the earlier you start saving for retirement, the less you need to put away every week.” —Dino Mari Testa
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