Yesterday, my girlfriend and I were having this conversation about her friend who wants to buy a coffee shake at Starbucks that costs somewhere around PHP 150.00.
She insisted that her friend shouldn’t buy that expensive coffee but instead buy that same coffee shake somewhere where the price is more affordable so that whatever money she SAVES, could be set aside and put it into use for other expenses.
Her friend jokingly remarked that she should stop acting like a scrooge and enjoy all the best things out of life. Her friend also said that maybe I’m influencing her too much and that is why she should lighten up a bit. But eventually, by following my girlfriend’s advice, her friend ended up not buying that expensive coffee.
But for the sake of discussion, let’s say her friend finds a more affordable coffee shake for only PHP 50.00 and decides to buy it, then her friend has saved PHP 100.00. Which brings me to ask the this question, what do you plan on doing in the money that you saved?
The secret to saving money revealed
While her friend did an excellent job of saving money, what most people don’t realize is where to put that money saved.
Oftentimes, we see great deals and discounts on basic things and we buy those things thinking that we saved a certain amount of money based on the total discounts availed. But the reality is that money is not really saved because most of the time, we spend that money on things to reward ourselves for doing a good job of saving money.
For example, in the supermarket, we see a can of sardines that costs PHP 15.00. If we usually eat a can per day, we need to buy thirty cans for PHP 450.00 so that we can eat one can a day for a whole month. If for the next month, that same can of sardines was offered for a 20% discount, we would only spend PHP 360.00 on thirty cans and save a total of PHP 90.00. What we just did there is the first part of saving money. The last part is learning wisely where to put that PHP 90.00. If you will spend that PHP 90.00 on things you don’t actually need to reward yourself after a lengthy day buying grocery items, then there’s not really any money saved after. But if you set aside that PHP 90.00 and put it inside a piggy bank, then you have done an excellent job on completing the whole process of saving money.
Let’s try to see this example on a bigger picture. If we set a budget for grocery items amounting to PHP 10,000.00 per month and we did an excellent job of saving PHP 2,000.00 on finding great deals on the market, the wise thing to do is that this money should be added to your investments or retirement funds and not to be spent on unnecessary things. If you follow the 10-20-70 rule, there shouldn’t be a problem spending money on self-rewards since there’s already a specific budget for that.
So the next time we set our budget on something, always remember that to truly save money, it’s not about how much money you save, it’s about how much money you keep from what is saved.
Happy saving!