Personal Finance Management - Saving

Issues

Hello readers of 2coffee.dev, how have you been lately? Are you doing well? The weather in Hanoi has been unpredictable, causing me to go through a rather severe illness, but luckily it didn't last long, and I have fully recovered my writing ability.

Recently, there have been many articles on my personal page related to the question of how to manage personal finances, asking about financial management applications, or even articles sharing financial management applications they have created themselves. When reading the comments, I encountered many opinions with perspectives like not using them due to laziness in recording, applications becoming useless if not recorded, or simply... not being able to link to the bank, so they didn't use them...

In the face of these comments, I somewhat sympathize with those viewpoints. People only care about financial management when they truly want to. For example, one day they suddenly want to know why no matter how much they earn, it’s never enough, or they want to save money to invest or start a business... Or they may not have seen the benefits that expense management brings, like I hadn't many years ago.

Taking this opportunity, I’d like to recount my financial management story, mainly to save because before that, I didn't have any emergency fund, and money just flowed out as the saying goes, no matter how much you earn, it all goes. In this article, I will mention simple yet highly effective saving methods, while also highlighting the importance of recording expenses in personal finance management.

My Personal Story

Graduating also meant I had to stand on my own feet, no longer relying on my parents' allowances. At that time, everything was really difficult for me until I held my first month's salary in my hand. Wow! I have money now; I can buy the things I've always dreamed of. A new phone, a new laptop? Or a pair of shoes, a new outfit?

I set aside a regular monthly amount to send home to my mother, asking her to keep it, and just after two years, I was able to buy a motorcycle with my savings. The feeling of touching the bike I paid for was truly wonderful. I didn’t waste those two years of saving up, regardless of how little my salary was at that time.

Gradually, my salary increased over time, and I no longer sent money home to keep; instead, I enjoyed days with my phone, laptop purchased on credit. There were so many outings that I couldn’t even remember them all. Then suddenly, one day, I looked back over that time, how much money had I saved? No! It wasn't much; apart from a credit card with double the limit, everything else just seemed to flow away like water into the sea.

But to say that I spent all my earnings on myself would be somewhat unfair. Every month, I still set aside a small amount to send home for my parents to manage. You might not know, but I am the eldest of four siblings. As of now, my three younger siblings are still in university.

Everyone has their own worries and calculations. But everyone has the ability to earn and save money; many even seize market opportunities to invest. Some might tell you to enjoy life now and save for later. If you think seriously, when is later? Have you ever asked yourself how much emergency money you have for unexpected situations? If not, perhaps this is the time to start saving to do greater things.

Saving

The saving habit began during my university days. I don’t quite remember where I learned this saving method or from whom, but the implementation is very simple: every day, set aside 5-10 thousand to put into a piggy bank. Try to maintain this daily and always think that putting it in means losing it; don’t expect to take it out soon. Initially, it was very effective, but as a student, sometimes I couldn't keep calm and ended up taking some out. The most successful time was when I saved a few million, holding a bunch of small bills in my hand, happily taking them to the shop to exchange for shiny polymer notes.

About a year or two ago, MoMo introduced the “Thần Tài” wallet feature, a type of savings wallet that earns interest daily. I found it quite interesting and discovered that it had a saving method quite similar to my student days. You can transfer money at any time, even set it to deposit daily. Wow! It was time to try that effective method from years ago again!

So I started using the “Thần Tài” wallet, setting up a daily deposit of 50 thousand, an amount that isn't too large but safe to start with, treating each day as "losing" 50 thousand. Then, a bolder idea struck me: to raise this regular amount weekly or biweekly if possible. Gradually, the amount increased to 60, 70, 100, 150... thousand each day.

Reading this, some might think, "That's just for show. Why not set aside a lump sum when you receive your salary?" To answer this question, it depends on each person’s style. You can set aside a certain amount right from the start if you prefer. But I chose to set aside daily to cover emergency situations. For example, not every month has the same expenses. If I see that my money is running low, I will reduce the daily deposit amount or stop it altogether. The ultimate goal is still to ensure that I never touch the money in the savings wallet. Because my view is very clear: if you break once, you will break again. If you keep taking a little out, the term "saving" will gradually lose its meaning.

As the automatic deposit amount gradually increased, it was also time for me to find ways to reduce my spending. So how to reduce? Exactly, to reduce, you first have to see where your money is going.

Record Your Expenses

I have a habit of recording expenses rather than income. In reality, I don’t record income because my salary is fixed, and no one just gives me money. If I receive my salary and still have money left in my account, it's likely that amount is transferred to my savings.

There are many ways to record expenses, from writing on paper or entering them into Excel, as long as it’s convenient. I chose to use the MoneyLover application to keep track. This is not an advertisement; I know many applications help manage expenses, but this name always comes to mind first because I learned about it back when I was still a student, when it was reported that a group of Vietnamese invented this application. This shadow is too large whenever I mention expense management applications.

Initially, recording expenses was indeed difficult; I often forgot to enter them, which ruined everything. Or some days I recorded very detailed entries, maintained it for a few days, but then there would be one day I forgot to enter, and it was like a chain reaction; I wouldn’t enter after that. It’s true that you need a lot of patience to achieve this.

A very nice feature in expense tracking applications is budget setting. For example, you might decide to spend only 3 million on food and 1 million on personal items in a month... It sounds good, but figuring out how to set the budget reasonably is not easy. I also struggled with budget setting at first, so my advice to you is to estimate based on some arbitrary amount for the budget, so after you gather data from the first month, you can easily adjust for the second month and the following months.

The budget is great in that it serves as a challenge for you. Anything boring, turn it into a challenge. Because when it becomes a challenge, you will always want to overcome it. You must find ways to ensure that all expenses remain within or below the budget. The tighter the budget, the closer you are to a higher challenge.

Since applying this method, I can clearly see where my money is going. The budget is set, so if I happen to see a beautiful item online, the first thing I do is check the price, then look at my current budget. Thanks to recording, I discovered that many items weren't as necessary as I thought.

Habits Are Formed Over Many Days, Not in One Day

Just as many people have said, all expense management applications become useless if data isn’t entered. This statement is not wrong, but it contradicts itself or is just trying to justify the unwillingness to record. You must record to have data to adjust your expenses appropriately.

Some people even argue that an application without bank linking features is essentially "useless." Linking here implies fetching all transaction histories from the bank for easy tracking. Personally, I have used the bank linking feature (in the MoneyLover application), and all transactions synchronize fully, but it’s only for viewing; it doesn’t add much value to my current management method, because many transactions involve money transfers or other income and expenses unrelated to my financial management, even causing confusion.

Manually entering data is like a double-edged sword. Entering data serves as a commitment to expenses, a commitment to the budget, to adjust behavior, not just to see numbers laid out before you. I often tell others or remind myself that if there is a first time, there will be a second, third... Repeated action will become a habit until you unconsciously walk out of the supermarket, open your phone, and start entering those numbers.

Results

The last section is not about boasting about the amount of money saved. I cannot take a photo of my current savings, which means everything I’ve said above could be empty or even fabricated. But if you’ve read this far, consider that I’ve convinced you 50%; the remaining 50% depends on you.

Just by using two simple methods of setting aside a certain amount daily, combined with recording income and expenses along with budgeting, and a little challenge, I have managed to save an emergency fund for myself. What about you? Are you saving? What methods do you use? Please share them in the comments so everyone can know. Thank you.