Last 2013, a friend in church approached me and asked me about saving for my retirement. Yes ‘retirement’ and it sounds awkward and weird to me back then. Imagine asking a young engineer who’s just been working for less than three months about retirement. I mean I’ve just started working and I am still enjoying the fruits of my labor.
Can I enjoy it first while I’m still starting?
If you share the same reaction as mine. Then let me share to you how this question changed my financial state.
That question made me curious, I was seeking for answers and assessing myself on how will I truly prepare for my retirement. The only thing I know that time was to save money so I started from there. Upon searching on the internet, I stumbled upon the 10-20-70 principle, where it says that 20% of my income should go to savings first and budget what’s left from my income.
When I learned about the 10-20-70 budget, I tried to discipline myself, stick to this idea and apply it. To prioritize savings and budget what’s left for expenses, unfortunately this budget didn’t work out for me. When I was doing it the 70% of the budget wasn’t enough for our expenses at home. So that time, I only set aside 10% for my savings and allot 80% for our expenses.
Having this in mind I am very thankful to that friend in church for asking me about my retirement because that question led me from inconsistency to consistency in managing my finances. Though I was saving small that time, it planted a seed in me for something better in the future.
Making the habit..
After several months of saving, I became a regular employee in the company, I had an increase in my salary plus daily living allowances. I was really happy because this time I can now follow the 10-20-70 rule. I didn’t change my lifestyle so my expenses were still the same. Now because of that raise, I have increased my tithe and my savings as well.
Every paycheck, I disciplined myself to automatically save money and make the habit of saving. Since the company started to give me daily allowances, that’s the time I also started raising my emergency fund.
I changed my budget to 10% tithe 10% savings 20% emergency fund and 60% expenses.
Focusing on short-term goals…
After a year in the company, I got promoted and had a significant increase. Again, I was really happy because I have increased my tithe and savings for the 2nd time.
Having a bigger income doesn’t mean I need to have a change in lifestyle, so I continued to live my simple and frugal life.
That time I was focused in completing my emergency fund, it has accumulated to 2 months of our expenses already and my target was only 3 months of expenses.
I believe that I was right on track.
Last 2014, I was assigned abroad for 3 months. That’s my first time to handle big amounts of money, at first I was overwhelmed but I know I was prepared for it.
I have completed my 3 months’ worth of emergency fund so I added another 3 months to it to have 6 months’ worth of emergency fund from my earnings abroad. I have used the remaining money to renovate a part of our old house.
Having these short-term goals helped me a lot in managing my finances
And it was worth my spending..
After 3 months abroad..
I am in the Philippines again earning back to my regular income. I’m still living the same simple and frugal life, and I am content and happy about it.
I know I can spend on luxuries but I don’t prefer to do it yet. There are still goals that I need to accomplish and that is my priority.
Contentment is a choice and everyone has it, some people just lack the courage to choose it.
From 2013 (when my friend in church asked me about retirement) up to 2015 (after my job abroad), my financial state became better than before, I have 6 months’ worth of emergency fund, I have no debts, and most of my money is invested (up to now).
My budget for every paycheck now is 10% tithe 50% savings and 40% expenses.
In a span of 2 years my financial status has changed for the better and it was because of having the right foundations and discipline in applying it.
The 3 Main Reasons why my finances changed
Hunger for Knowledge
When my friend asked me about my retirement, I had no idea how to answer before which led me to curiosity and eventually made me hungry for knowledge. I attended seminars, read books and try to apply it one step at a time. In the same way, I believe that every one of us can change our financial state if we are hungry enough to be financially literate. Truly investing in knowledge has the best gains.
Disciplined as a Rock.
Knowing personal finance is one thing but applying it is another. It will take a lot of discipline and changed mindsets before getting used to it. It may be hard at first but we don’t have to make giant leaps. Baby steps will make the habit in us and these little acts of change will eventually lead us to financial freedom.
God is our provider; always be faithful with what you have
I believe that God is the one who gives us the ability to produce wealth. And by that I know that we have security in him. We might have a small income today but if you are faithful with it, I know that it will eventually grow. As we become more knowledgeable of Him and in our personal finance, the more it opens opportunities for us to grow as good stewards. Just continue to invest in knowledge and be disciplined enough to follow it.
With an ounce of faith, room for knowledge, and discipline in applying it, I believe that we can prepare ourselves to retire comfortably after 20 or 30 years and become a channel of blessing to people.