“The art is not in making money, but in keeping it.” -- Proverb
Based on the recent study by Bangko Sentral ng Pilipinas (BSP), the gross savings rate in the Philippines was reported at 9.2319% of GDP in 2023. Simply put, for every 100 pesos of the country’s total output, only 9.2319 pesos were saved, making the Philippines’ savings rate relatively low compared to other East Asian economies. Furthermore, the proportion of Filipino households with savings dipped to its lowest level in over three years in the fourth quarter 2024 (25.6 percent vs 29 percent in Q3 of the surveyed family).
We all believe and recognize the importance of savings, yet it’s something many of us struggle and find hard to do. Not because we don’t have the money to save, but mostly because we didn’t develop the right habit for savings. Starting a savings plan is one thing, but sustaining it for the long haul is another. Sticking to your savings goal isn’t easy but consistency is the key to financial success. Whether you’re building an emergency fund, saving for your kids’ education or setting up your retirement fund, having the discipline and self-control is crucial.
Based on my own experience, there are two most difficult parts about saving money. First is setting aside and prioritizing the money for savings over needs and wants. Most people follow the formula: Income minus expenses equals savings. As we rarely run out of expenses, usually there is very little or nothing left for savings. The second problem is overcoming the temptation to dip into savings for non-essential purchases.
As one young couple admitted, “We have always wanted to save. We would usually set aside portion of our salary and keep it at home. But the easy access to it also prevented us from having real savings. We also cannot resist to defer doing the actual savings to next month, and the next, in favor of “our needs”. To date, we have no decent savings, in case of rainy days.”
These concerns are common. I also experienced it during my early working years. The urge to splurge was just so strong that I usually have no money left for savings at the end of each month.
I was just thankful that I joined a company where they provide the auto-deduction facility for their employees. Salary deduction program is a simple and effective way that allowed me to save money automatically. With this system, a portion of my salary was transferred directly into my savings and investment account even before I received it.
And it has helped me tremendously. With automatic deductions, saving becomes second nature to me. It forced me to develop the savings habit. There was no need to remind myself to transfer money for my savings (which also includes investments and insurance premium payments). They all happened automatically and seamlessly, helping me stay on track of my financial goals without much effort. Savings become consistent.
The automated transfers facility allowed me to manage my spendings, as it created a barrier between my disposable income and the money I have saved. With a portion of my salary automatically transferred to my savings, my spending budget was based on the money that’s left after the transfer was done. From “income minus expense equals savings”, I was already doing “income minus savings equals expense”. This forced me to identify and prioritize my essential over the non-essential expenses, according to my budget. Somehow, it also removed the guilt to spend on my wants since I know that my savings have been taken care of.
The auto-deduct facility really made my money work for me. as it significantly grew overtime through the beauty of cost averaging and compound interest. As saving and investing are done consistently, regardless of market condition/price, it helps reduce the impact of market volatility by buying more shares when the price is low and fewer when the price is high, effectively averaging out the cost per share over time. On the other hand, a consistent and long term saving and investing allowed me to benefit from the interest calculated on both the initial principal and all of the previously accumulated interest. This “interest on interest,” led to faster growth of my savings and investments.
So if you are still struggling with your savings discipline, the auto-deduct savings program is what you are looking for. Talk to your HR as they may have this facility available for you. Or you may check out banks and financial institutions which also offer similar auto-deduct facility. You need not be alone in your quest for financial security. These auto-deduction facilities can make it easy for you to build and reach your financial goals without much stress and effort You just need to take the first step!
