60-day money challenge?

Frugal husband and me at the Sirao flower farm up in the mountains of Cebu
Frugal husband and me at the Sirao flower farm up in the mountains of Cebu

I don’t believe in the 60-day money challenge.

This will probably be an unpopular opinion, but let me just say this at the outset–I don’t believe these short term money challenges work.

They come in different forms, whether by saving PhP20.00/USD0.39, PhP50/USD1.0, PhP100/USD2.00 per day for 30, 60,or 90 days. You are promised a pot gold or x amount of money at the end of the challenge, which is simply the money that you accumulated at the end of the challenge. Saving PhP100 a day for 90 days will yield you PhP9,000.00, a feat for most people who cannot comprehend how saving as little as PhP100 a day can yield almost a month’s minimum wage.

Shock value

What makes this challenge so appealing? I feel that it certainly has shock value. It mainly appeals to people with little to no saving habits, whether young corporate yuppies with expensive payday tastes of going to a fancy restaurant come payday, one-day payday millionaires, or people who have been working for years but have nothing to show for them. No shame on them, we all have been there at one point or another in our lives when we had no awareness of the value of a peso or a dollar.

This challenge is especially popular among minimum or below minimum wage earners who often refuse to save money as they earn “too little” to actually live on. It is so shocking that by just setting aside as little as PhP20.00 (or even less) per day, you could save a substantial amount of money!

On the plus side, this challenge, at the very least, introduces the masses to the concept of actually setting aside money. The long duration of 30 days may be enough to spark a good habit. You already know the amount that’s waiting for you at the end of the 30 days so that’s a huge motivator to start and maintain the habit.

Arbitrary amount

What’s the rationale for setting the arbitrary amounts of 20, 50, and 100? These are low denomination peso amounts that are certainly within reach of the common Filipino. On the other hand, I feel that it makes undue emphasis on the amount. You could very easily do that by setting your sights on buying a fancy dress worth PhP5,000/USD100.00 and buying it at the end of the month.

PhP5,000 isn’t a real challenge if you are making PhP50,000.00+ a month. It’s peanuts if you look at it in conjunction with your monthly income. If you want a real challenge, take your eyes off the arbitary amount and try challenging your saving rate instead. If you’re in it for the long haul, changing your attitude to saving money is paramount.

Attitude to saving

How do you feel about saving money? This may depend on your upbringing, environment, or personal experiences with money. Some are completely detached, wanting nothing to do with it, until they are faced with the real consequences of not having any. Some have an all or nothing attitude, a scarcity approach and fear the loss of money. So they would rather enjoy their money now rather than save it for later.

FH takes great pleasure in saving money. He enjoys watching his bank balances rise up. He certainly is one unusual man. He is not into buying shiny things, or the latest gadget, as men commonly are. His savings accounts give him some form of personal fulfillment.

I feel the same way about saving money. I relish preparing my budget every payday. I look forward to depositing money in the bank, or funding my brokerage account, or adding to my retirement account. Just before the next payday and my actual money matches my planned budget, I feel a sense of accomplishment that I was able to stick to my budget as I am in no way perfect, there are some periods where I overstep my budget and I’ve learned to live with that.

I submit that it makes sense to derive a sense of accomplishment from saving money rather than from shopping or other external indicator of success. Make saving your personal goal, a form of career milestone. Shopping makes you feel all nice and bright for a mere moment while saving lasts for a long time.

Saving rate matters more

Viewed in the context of personal fulfillment, it will be much easier for you to approach this saving challenge. But focus on improving your saving rate instead, rather than unduly focusing on the amount.

If you’re new to this blog, SAVING RATE is better presented in the following formula

(SAVINGS / MONTHLY INCOME) = YOUR SAVING RATE %

Simply put, your saving rate is the percentage of your monthly net pay that you have set aside and either deposited into your savings accounts, or invested in brokerage or retirement accounts. Savings is all the money that you have put into assets. It is all the money that you did not spend.

Your saving rate gives you a more realistic view of your saving progress. It makes you less complacent about money. Because what is a PhP5,000 a month saving when you’re making PhP100,000 a month? That’s certainly not a lot of money. To the contrary, it puts you in danger of SPENDING A LOT MORE MONEY than you would have without that arbitrary money challenge.

You may be misled into thinking, “I already saved PhP5,000 this month, I can relax and spend the rest of my paycheck!” What if your remaining paycheck was 80% of your salary? Isn’t that such a waste of money?

Just as the typical rap song says, stop FOCUSING on them dollar dollar bills! Focus on your saving rate instead.

My challenge to you

My July 2019 saving rate is 60.33% while my 2019 year-to-date saving rate is 63.42%. The Philippines has a saving rate of 12.2%.* Can you top that? If you want a real challenge this is what I propose, CAN YOU SAVE AT LEAST 20% OF YOUR MONTHLY PAY THIS MONTH?

If you meet the 20% saving rate this month, can you add one percent every succeeding month, i.e. 21%, 22%, and so on with each and every month? You can stop once it starts to hurt, just like working out at the gym. Hahaha.

When you receive a raise or salary increase at work, CAN YOU ADD 5 TO 10% on your SAVING RATE?

Are you ready to take on my challenge?

George


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