But of course, there are always silver linings in each situation. I finally decided to quit!
Okay, I am not quitting the job immediately, without a replacement. But has started looking for a job which suits my preferences. Job hunting has now officially started. Our current savings and investment are not yet enough to cover our expenditures in the next 20 or 30 years. C'mmon, I am 38 years old and hadn't solidify our retirement nest egg yet. So glad though that we have started. Late but had started.
In the meantime, let me share with you how are we started saving from 0% before to now at least 37.77% of my monthly income. Saving is the toughest. I'd save before and then my phone rang, and then gone. Or something happen. Or someone needs it. Or I want this. Or something breaks. Or I felt like the income is not enough this payday, I'll save on the next. It never ballooned.
You see. I've just been going in circle. The biggest factor on which it didn't materialize is my self. I am not knowledgeable about personal finance. I was not train to say no. I wasn't able to identify my wants versus my needs. I rely on retail therapy for short term satisfaction.I wasn't able to identify what's an emergency or not. I kept up with friends even though I cannot afford it.
Sad but I went through all of these. I've learned how to be broke and in debt though I am employed. It took years to change. It took a lot of years of courage and humbling experience to finally come to peace with my self when it comes to finances and expenditures .
It didn't happened overnight.
There were so many frustrations.
But let met break it down to you where my salary is going to every month.
Company Retirement Fund Contribution: 10.76%
Pag-Ibig Fund: 1.43%
UITF: 5.72%
Mutual Fund: 1.43%
Insurance (3): 10.28%
Auto - save Accounts:
Emergency: 3.86%
Investment: 1.43%
Appliance: 1.43%
Car: 1.43%
Total: 37.77%
Total is 37.77% of my net income. But the percentage actually varies each month due to overtimes and night differentials.
Yes, I am receiving a salary above the average. But it took years too to accomplish this and of course, many projects to finish. Also, really working hard for a good performance review at the end of each year. I did overtime. I cover for someone who calls out sick or emergency leave. I initiate projects. I present process improvement. I try to solve the issues presented. I own the issue. And I am 10 years and counting to this company.
It wasn't easy.
I come to work day after day. Clocking myself to an 8 hour shift. I have missed holidays. I have missed family gatherings. I have missed being there.
The sacrifices I have come to terms to be able to get at least a good percentage for a good annual performance evaluation report. Which on some years are fruitless but just have to move on. Sometimes, good is not just enough.
Any employee can understand.
They say that it is good to know the balance between work and life. I am in the process of working it out. I'll let you if I know it.
Going back to the topic (sorry, I jump from one topic to another *wink*), let me share with you how we save the way we do. Disclaimer alert, and you have to remember that. What works for us may not always works for you. You will have to find the method that works for you. You try and give it a time, if it is effective, your desired result is presented. Otherwise, you have to check for more ways. You can actually devise one which suits you.
1. Company Retirement Program
Our company retirement program is one of the benefits our company offers to the employees since day 1. If I contribute to my retirement fund, my company will match it up to 3% of our contribution. And we are allowed to automatically save at the maximum of 10% of our salary. Which if added is already a 13%. Our contribution is already tax-free. But the matching amount from the company is with tax if my separation from the company is through resignation.
When I became employed, I didn't grab the opportunity. The reason behind was that the amount will only be given to you - 1st, if I resign. 2nd, if I was lay off, 3rd, if I retire. So, for many years, I didn't contribute to this retirement program. (Sayang...) My mindset that time was that if I needed the money I cannot withdraw the amount. Right, I don't have any idea yet what's an emergency fund. (Facepalm) Had I known about it earlier, I could have started earlier and should have been able to save more.
For those interested, what you need to do is ask your company if there is a retirement fund savings set up for the employees. I know some, they call it as bonds. These amount is automatically deducted from your salary so you will no longer see it in your payroll account. It appears like a force savings for you but you will thank yourself in the future.
Maybe you are asking, why don't I just invest it outside for higher gains? I tried that. It didn't work for me. At least for this, I no longer see the amount in my payroll account. And then, there is already a 3% guaranteed amount plus of course the gains for my contribution. Our retirement contribution is also invested.
2. Pag Ibig Fund (MP1).
This is the MP1. Our company payroll doesn't support yet the MP2 funding but there were talks. Because I don't have time to go to the branch to complete my MP2 registration, I settled with increasing my contribution to MP1. The mandated amount to contribute as of this writing is Php 100 per employee which the employer match with another Php 100. I started to increase it to Php 300, three years ago. And then Php 500, a year ago. This January, I requested it to increase it to Php 1000. Why?
Because of dividend. The dividend varies but at least it is always above the inflation rates. For 2018, it is 7.61% for MP1 and 8.11% for MP2. I can withdraw the amount if I already completely contributed for 15 years and every 5 years thereafter. But I planned to get the amount when I retire.
Oh, and I just ask our Payroll department to debit a higher amount from my salary. So far, the last time I have gotten my contributions from Pag-ibig, the payments are posted up to date.
3. UITF
Our UITF is from BPI and BDO. It is a monthly auto debit from our account. What we did is to study first the UITF and then went to inquire. Note that you have to be firm in inquiring about the UITF. Some banks personnel will actually encourage you to open a product with VUL. So, you have to stick with what you want. Be ready for so many forms to fill up and 2 valid IDs to be presented. Don't forget your TIN number.
4. Mutual Fund
We have our own mutual fund set up. It is just a small amount for the recurring monthly debit but at least, we get to save on it. We have our separate one time pay mutual fund account to other institutions too.
5. Insurance.
We have our insurances too. I don't think I need to elaborate much about this. But initially, we only have the basic insurance. And later on, when there is an extra amount, we try to purchase another insurance with riders that were not covered on what we initially bought. And as we grow older, we noticed how the premium amount increases.
Honestly, I do not have an insurance when I was single. I don't find it as a necessity. But when I have my little girl, I crammed. I don't want to leave her with nothing just in case.
If you are looking for an insurance, talk to every agent. Have them present their products. Study what they offer. Learn about the company. Go with the product that really suits you (not with who you know) and be honest with what you can afford.
I set up this account to automatically deduct an amount from my payroll account. These are set up for those 'just in case' situations. Like a broken appliance. Just in case, we have our own car in the future. Like for an upcoming good investment such as bonds, RTBs, fixed income securities and such. We try to save an amount first then get to invest it when there is an opportunity.
Savings isn't innate to me. It took years to develop and to finally be able to set aside an amount. I was once living from paycheck to paycheck until I learned my lesson. I guessed almost everyone had been where I was once.
It is a fulfilling journey to finally be able to get a hold of our hard earned money and be able to enjoy its purpose without overspending and getting in debt.
In the future, I plan to save at least 50% of my income. That is if I am still with the same company. Otherwise, I will have to re-adjust if I have a new job and a new salary.
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