Pay Yourself First!
Tips to boost your savings through reverse budgeting

July 11, 2023 | by HC Mutual

We have entered the second half of the year. Let’s take this time to evaluate our personal goals and how far we have come in achieving them.

“Have I saved enough money?” is probably one of the most common questions we ask ourselves, and it is always disappointing when we find that we are nowhere near our saving goals. Yet, with our current economy, staying committed to our financial goals continues to be more challenging: it is not surprising that even professionals with a decent monthly salary have little to nothing allotted for their savings account. 

If you’re one of those having difficulty building your savings, all is not lost. There’s a saving method called “reverse budgeting”, anchored on the idea of paying yourself first before anything else. This method is perfect for those who want to grow their savings and have set a deadline for their financial goals. 
What are the advantages of reverse budgeting?
1. It forces you to live within/below your means.
Do you find yourself living more expensively as your income increases? You are not alone. In fact, this tendency is quite common. With reverse budgeting, you will be forced to live within or below your means even if your income increases. This means that a bigger fraction of your income can be allotted for savings.
2. It You can achieve your financial goals sooner.
Reverse budgeting is a savings-oriented strategy. It involves planning your expenses based on how much you want to save per month. It enables you to prioritize your saving goals, commit to your saving method, and eventually acquire the goal you set for a particular period or even earlier than you planned.
3. It converts your DESIRE to save money into a NECESSITY. 
Since reverse budgeting involves paying yourself first BEFORE settling your mandatory expenses, saving becomes a responsibility every time you receive your salary. This develops your discipline and commitment in reaching your financial goals.
How do you apply reverse budgeting? 
1.Plan your way of spending based on how much you want to save.
Set how much money you want to save in a given period of time, then analyze how much you have to save monthly to reach that goal. Consider your monthly income, as well as mandatory and discretionary expenses per month.

This is also where you have to decide which discretionary expenses to remove. Discretionary expenses include subscriptions to various services, gym memberships, online shopping, and other wants that you can live without.
2. Research savings plans that can serve as good investments for you.
Being knowledgeable about your options for savings plans is a good strategy for maximizing your savings. Choose which plans work for you and which will help you achieve your financial goals sooner. This is also where you have to decide which discretionary expenses to remove. Discretionary expenses include subscriptions to various services, gym memberships, online shopping, and other wants that you can live without.

Here are some things to consider:
  • Interest rates
  • Minimum balance requirements
  • Savings type (e.g. Regular savings vs. time deposit) 
  • Automatic saving options
There’s a saying that one should not put all their eggs in one basket – and this also applies to saving. Consider opening multiple accounts so you can have more flexibility and maximize earning interest from different avenues.
3. Open a secure savings account and automate your savings. 
When you automate your savings, there’s a better chance you won’t be able to use the money for anything else, and can help make paying yourself first an easier habit.

HC Mutual provides adaptable and cost-effective plans that empower you to manage your finances and live the life you aspire. Our savings plans offer attractive interest rates and encourage you to save automatically via payroll deduction or automatic debit arrangement (ADA) – so you can easily expedite the growth of your savings and accomplish your financial goals sooner.

Select the plan that suits you best, and witness the remarkable growth of your savings.
  • Flexible payments terms of 3, 5, or 7 years
  • 3% earnings from your savings per annum
  • Easy saving through payroll deduction automatic debit arrangement, or payment through any U Store branch nationwide
LEARN MORE

Save up and earn big for that dream house, dream vacation, or dream purchase
with HC Mutual!

  • Start saving at Php 2,424, Php 4,848, or Php 7,272 per month
  • 5-year plan
  • 5% per annum after 5 years and upon completion of the savings plan
LEARN MORE

Starting and committing to a new saving method like reverse budgeting can be daunting at first. 

But with dedication to pay yourself for all the hard work that you do, 

you can eventually turn it into a habit that you won’t regret getting into. 

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