If you can get in the habit of tracking your spending, you’ll be on your way to creating a budget and savings plan that may help you reach your goals faster and with more confidence. Read our money saving tips below to get started.
The first step to saving money is to figure out your goal.
It could be a short-term aspiration like buying a car, booking a holiday or installing a new kitchen. Or it could be one of life’s big milestones, like buying a property, having a baby, funding your kids’ education or enjoying a comfortable retirement. Once you’ve decided what you’re trying to achieve, work out how much you need to save to reach this goal, and by when. Once you have your goal, write it down, tell a friend, or both. Writing your goals down, sharing them and tracking them could help you to achieve them.
The next step to consider is where your money will come from. One of the most common ways to save money is to create a surplus between how much you earn and how much you spend each month.
You may need to identify extra income sources to help you earn more money or reduce your spending to free up money for your savings goals. Tips to you get started:
Creating a budget is often seen as the best way to save money. By tracking your income and spending, you can identify where your money goes, and from this you can avoid some non-essentials or reduce expenses.
For example, if you buy your lunch every day, make your own lunch instead. Cut back on non-essentials like pay TV, gym memberships, entertainment and eating out or find more affordable options.
Every bit adds up. Don’t deprive yourself of every bit of fun, but cutting back here and there could make a difference.
Unfortunately, bills are a part of life, but it’s possible you may not be getting the best deals out there, especially if it’s been a while since you last contacted your providers. Reach out to your gas, electricity, mobile phone and broadband providers, and see if they have better deals to help you save more money.
Or shop around for a new provider, there are plenty of product and service comparison sites online to help you make an informed decision that suits your budget.
Thinking green doesn’t just help the environment—it can also be one of the best ways to save money. If you’re throwing out food at the end of every week, you might be able to reduce your grocery spending and your food waste. Likewise, instead of replacing household goods, consider repairing, reusing or upcycling them for another purpose.
If you’re a two-car household, think about whether you can do without the second car. You may spend more on public transport and taxis, but you could save money on petrol, tolls, parking, registration, insurance and maintenance.
If you have a number of debts consolidating them into one may save you money and make budgeting and money management easier. Having multiple debts, such as credit card debt, personal loans and a home loan could mean you’re paying more in interest rates and fees than you have to.
There are plenty of debt consolidation loans out there, so it may be beneficial to look on a comparison website for the best deal or speak to us.
The best way to save money may depend on whether your saving goals are long term or short term. For example, a separate savings account where your money is readily accessible might be useful for a short-term goal. On the other hand, a term deposit where your money is tied up for a set period of time in return for higher interest, could be a more suitable option for a longer-term goal.
When you’re looking for a savings product, factor in the fees charged, interest rates, how accessible your money is, whether you can set up an automatic direct debit and whether there’s a minimum amount you need to deposit each month. Some common ways to save more are:
Most banks in Australia offer a variety of options for transaction and savings accounts. Standard savings accounts usually offer low fees and access to your money, but you may get a lower interest rate. High interest savings accounts typically have higher interest rates, but there may be penalties for withdrawing your money before a set period of time has passed, or if you don’t meet ongoing minimum deposit requirements.
An offset account can help you save money by minimising the interest you pay on your home loan. Offset accounts allow you to put extra money into your account to offset your home loan balance, so you only pay interest on the remaining portion of your loan.
Many banks also offer a term deposit option. Term deposits work by locking your money away for a certain timeframe (or ‘term’) in exchange for a guaranteed interest rate return during that time. A general rule of thumb is the longer the timeframe, the higher the interest rate.
Term deposits are generally low in fees, typically require a minimum initial deposit, and sometimes also a minimum ongoing deposit. If you withdraw money from your term deposit account before the timeframe is over, you could pay additional fees.
Investment bonds can be a tax-effective way of saving for the long term (longer than 10 years). Australian investment bonds typically require either a minimum deposit or minimum ongoing deposits, and you can choose how your money is invested.
Consider investing your money to save over the longer term. Some ways to invest money in Australia include shares, property, exchange traded funds, and making additional super contributions. Your best option will depend on your lifestyle, the amount you aim to save and your risk tolerance.
Before investing your savings, it might be useful to speak to us to help you make the right choice for your goals.
©AWM Services Pty Ltd.