Is Your Tax Bigger than Your Savings?

Every time you see your payslip, what's the first thing you check? I guess it would be logical to check your Net Pay first, or your actual take home money right after all the deductions have been subtracted to your Gross Salary.

Does it excite you to check your payslip, knowing that someone you don't know was actually the first to get his shares?

Of course, I'm talking about tax -- the one that annoys us every pay day.

You just then stare blank and with deep sigh, think of all the things that money could have bought for you.

The first time I received my Income Tax Return (ITR), heck, I had that very same thought. I skeptically looked at the total taxes I had donated to the lawmakers government for a year, and I was like, Damn! That's a lot of money! That could have afforded me to buy a decent, 2nd hand car!
That's when I realized how poor my savings was.

That's when I realized how my tax for just one year was actually bigger than my savings my entire life.

That's the time I stopped mulling and complaining on things I don't have control with and instead focused on finding ways on becoming more effective with things I have power: saving and investing.

The reason is pretty obvious: your tax is bigger than your savings after a year, because tax gets paid first before you even see the numbers on your own payslip, and there's nothing you can do about it! No lame excuses that you need to pay this or buy that first, because tax will be deducted to your salary before you receive it, period. Your savings, on the other hand, is smaller because of a very popular belief poorly instilled within working people:

Salary - Expenses = Savings

But, unlike tax, there's something you can do about this.

Most people live from paycheck to paycheck just to pay bills, loans and credits. So their savings after a year remains little to nothing. The common alibi, of course, is that you still have a long list of what needs to be paid first before you can start saving or investing. Let me remind you, that whatever you do and however you pay, expenses will never go away!

Instead of having a poor spending mindset, why not use what businessmen and wealthy people do:

Salary - Savings = Expenses

This is what the rich do. They pay themselves first in the form of their savings and investments. And what remains on their money is what they spend. Not surprisingly, this practice will seriously teach you how to budget too!

So if tax is deducted right away from your salary, why not do the same for your savings? Why not make saving mandatory? Why not make saving a part of your salary deduction? Why not make investing an obligation?

Why not pay yourself first?

Making saving and investing a mandatory obligation to yourself becomes powerful when it efficiently saves or invests a certain amount of your income even before you receive your payslip, just like tax. While you can withdraw these savings and investments too, at least it would require some effort on your part, unlike when money is already in the your ATM, tempting you to spend it. In some banks, early withdrawal of your investments will even require you to pay some fee, which is good because this will make you think twice before you pull out your money! Plus, you won’t feel the nip of having to save or be burdened with setting aside money every pay day since you have the comfort of knowing that the bank already saved your money for you, so you can spend the remaining money as you would normally do.

And if you have a goal, this could really make up for the lost times you should have started saving and investing. The good news is that, banks and other financial institutions now offers such feature that makes saving and investing more convenient and efficient!

The feature? 
Automating your savings and investment plans means having a specified date when the bank will save or invest the money you want to allocate from your payroll account with a determined frequency. Yes, the bank can do this for you!

Let's say your monthly pay day is every 10th and 20th of the month. You can specify that every 11th and 21st of the month, your bank will automatically transfer 1,000 Pesos from your payroll account to your savings account. Of course, this would require you to open a separate savings account from your existing payroll account, though on the same bank.

What's even greater is that banks offering automatic savings programs even comes with added benefits! So to help you get started saving or investing automatically, here's a quick cheat list on banks that offers such programs as I write:

BPI - Bank of the Philippine Islands

BPI Save-up 
Type: Savings + Insurance*
Initial Deposit: None
Subsequent Amount: 1,000 Php.
Added Benefit: Insurance coverage of up to 5x your balance
Interest Rate: 0.75%   

*Insurance coverage from Philam Life

BDO - Banco De Oro

BDO Easy Investment Plan 
Type: Savings + Investment
Initial Deposit: 1,000 Php.
Subsequent Amount: 1,000 Php.
Holding Period: 1 month to 5 years
Interest Rate: Depends on the performance of the Stock Market

PNB - Philippine National Bank

PNB Auto Invest Plan
Type: Savings + Investment**
Initial Deposit: 2,000 Php.
Interest Rate: Depends on the performance of the Stock Market

** based on the PNB DREAM Builder Intermediate Term Bond Fund product

Citibank Auto Savings 
Type: Savings / Investment
Initial Deposit: Varies on Product
Subsequent Amount: Varies on Product
Holding Period: 6 months to 1 year
Interest Rate: Varies on Product

NOTE: Your current payroll account should be on the same bank where you want to open a savings or an investment account because they don't accept inter-bank transactions yet, such as from your BPI Payroll transferring funds to a BDO Savings account. And if your bank is not listed above, don't hesitate to call them and ask if they have such feature because I may have just missed it.

To briefly emphasize the above listed banks and the products they offer, BPI (Save-Up) is the easiest to apply for (assuming you already have an account with them). You can apply via their online application process and just wait for your Save-Up Insurance card after few days. 

But if you want to have superior returns that are above the prevailing interest rates, you should go for BDO, PNB or Citibank's products. These products allow you to invest in the Philippine Stock Market indirectly. However, you should bear in mind that just like investing directly in the stock market, these products generally come with risks because the returns of your investments will greatly depend on the performance of the stock market. So it would be better if you invest for a longer period of time to ensure a higher return and let your money outperform market volatility using cost averaging.

In addition
, if your company has a cooperative or other employee-benefit sharing programs, you should take advantage of these opportunities and sign up for salary deductions for your money to grow without having to worry much!

Finally, you can consider investing in Mutual Funds. You just have to open an account in any licensed Mutual Funds company and ask if they're registered as a merchant in your bank. This way, you can make your monthly payments via bank easily since you'll do it online and of course, automatic.

Alas, be cautious. You should be realistic with your plan. Start small then increment the amount you allocate to each savings plan when you're already comfortable.

Don't start big because you might run short of cash to spend, which would just lead you to early withdrawal of your savings and investments. 10% is the realistic goal. Try to save at least 10% of your salary and live with the remaining 90%. If you notice you still have some extra cash, then you can increase it to 20%, and so on. 

Remember that the goal is not to save or invest one time, big time but to save and invest regularly!


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  1. hi, what do you mean by "These products allows you to invest in the Philippine Stock Market indirectly" ??

    1. Hi michael, thanks for dropping by! Regarding your question, it means that such products will be invested in Mutual Funds. Banks such as BDO and PNB pools money from many investors which will then be invested in stocks. One advantage of this is that it allows small-time investors to buy shares from companies that require huge capitals. I hope I answered your query. Tnx! ^_^

  2. Hi Sir Jeffrey. Your posts are inspiring. I'm truly grateful that I was able to know and learn about your blog. I'm really inspired to save and invest my money. I like the statement, "Remember that the goal is not to save or invest one time, big time but to save and invest regularly!" God bless. I hope I could receive more posts through my gmail account.

    1. Hi Karissa ^_^

      Thanks for letting the world know how you find this blog inspiring (because this inspires me too!) Yes, that's the goal: to make saving and investing a habit. Again, thanks for visiting my blog and for subscribing! And yes, you'll definitely receive future posts (just make sure you confirm your subscription).

      Cheers! ^_^

  3. Hi Sir Jeffrey,

    I really found your posts informative and inspiring. I'm so happy that I subscribed at Piso & Beyond, giving me financial knowledge and sharing them with my family and friends na din. I just had a concern, I was an OFW for 8 years but most of my earnings went to my 4 kids' education (2 just graduated from college), buying a 2nd-hand house in Cavite, my family's daily expenses and my travel expenses (been to 30 countries!) and now that I am settled here in Manila for good (I hope!) I was thinking if my savings is enough or do I need to work harder pa :) I have emergency fund equivalent to my 3 months salary; 1 equity and 1 balanced fund through BDO's EIP; paying monthly life & health insurance for myself and my 4 kids for 5 years; and saving on my 52 weeks challenge religiously. Do you think I should have peace of mind na? Hahaha Thanks in advance for your advice :) MERCY REYES

  4. Hi Ma'am,

    Thank you for your warm feedback and for subscribing to my blog, and I really appreciate that you share what you learn because in a simple way like that, you're contributing to the advocacy of bloggers like me, which is to help our fellow Pinoys have a healthy financial mindset.

    I must admit that I was really impressed with what you've accomplished so far! But to answer your questions might require more details such as your age and plans. Do you still plan to work here or just live the life as a full-time housewife and enjoy each morning breeze with your family?

    Either way, congratulations for hitting the bottom line of financial preparedness, which is being able to afford the freedom of choice in life. You may find a job (kung "maiinip kayo sa bahay") or put up a small business. At least you can enjoy either since you're after the passion and not much about the money already.

    My two cents here would be for you to continue paying your premiums in insurance until they get paid, then continue educating yourself with investment opportunities. JUST BEWARE OF SCAMS that offer very high returns that are too good to be true. You may also want to consider increasing your emergency fund to 6 months worth your salary.

    But again, the "enough being enough" in terms of savings will greatly depend on your plan. If you no longer plan to work, then simply get your monthly expenses and see if your savings can cover them until your golden years.

    Maraming salamat po ^_^

  5. I eenjoyed reading your post


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