14th August 2018

How to best save your pennies

Saving is important when planning for a smart financial future, however, one thing we all know is that saving our precious pennies is easier said than done! That said, there are numerous reasons why you should try to save some money: allow for emergency funds, make a large & sentimental purchase, take a holiday or constitute a deposit for your first home. 40 per cent of Aussies who are currently saving are working towards buying or renovating a home.

No matter your reasons for saving, it requires making several small changes in your life (and some self-constraint!) and coming to grips with your current finances and expenses. If you’re effective with it, these small changes can make a huge difference to your bank balance over time and ultimately set you up for success when it comes to making that dream purchase. Nice!

Here are some simple finance tips to help you save more:

Tip 1: Track your spending

Knowing exactly where your money is going is the first step to saving. Figuring out your spending habits is easier now than it’s ever been thanks to the multitude of apps and online resources (how good is online banking?!).

Before you can come up with a decent savings plan, you need to figure out what you absolutely must spend money on and what you would classify as unnecessary. Set aside some time, make yourself a cuppa and review your last six to twelve months of bank statements to see precisely where your money goes.

It sounds boring, but if you can categorise your expenditure to better understand your spending habits, you’ll be able to better visualize where it’s all going. Try: rent, utilities, transport, food, living expenses, health and medical expenses and so on. If you’re spending most of your money on Uber Eats, it’s time to get serious about your budgeting!

Finance tip 2: Always have a backup emergency fund

Saving for a rainy day is important. Even more so for those unexpected financial emergencies that we don’t have control over. Car broken down? Roof leaking? Cat broke its leg? You never can truly know when disaster or life changes will strike.

In a survey of Aussies who save by financial comparison site, Canstar, 33 per cent of the respondents admitted they were saving for an emergency fund, 47 per cent were saving for the future, 13 per cent for a car, while 10 per cent for an education. Always plan for the unplannable because the bills probably won’t stop coming in!

Finance tip 3: Plan to achieve.

What is it you want to achieve? Set out your financial goals and then formulate an accompanying budget – it all seems simple from there. It’s important to have a financial plan, it’ll be your ‘how to’ guide in getting you where you want to be in both your short term and long term saving goals. Without a concrete goal, you are less likely to be effective at saving.

Setting financial and savings goals are all about small wins. Set lots of smaller goals rather than one large goal for better success. Don’t plan to save $10,000 every six months but rather plan to save $400 each week. Breaking it down into more palatable chunks makes it more achievable and instantly rewarding when you hit your goal each week. #winning

It’s not unreasonable to set aside 10 to 15 per cent of your income as savings. To do so, identify non essentials and things you can spend less on, such as entertainment, clothes shopping and eating out – be brutal, it’s like a spring clean for your spending!

Finance tip 4: Get out of debt

Debts can overshadow any effort you’re putting into your finances and stop you from achieving financial freedom. Credit cards, personal loans, payday loans— debt can act as a roadblock to borrowing money for things that really matter, like a home. It’s best to limit using credit as much as possible as interest rates can bite off a sizeable chunk of your earnings. If you have any, paying off debts as soon as you can should be a priority.

But don’t stress, you can still receive a home loan with existing debt in the right circumstances. Chat to the team at Truevest Finance to find out how to prioritise your debt repayments.

Finance tip 5: Fees, policies and other annoying things

The average Australian spends more than $500 per year on bank fees. Do you know how much your bank accounts and credit cards are costing you without looking? It can be frightening.

Understanding your credit card and insurance policies can help you identify other areas where you can save money. Although a mundane task, by moving bank accounts to take advantage of perks or choosing to use low rate credit cards you can save thousands of dollars over time.

Being wise with your money takes discipline and an investment of time upfront to get your habits right. But once you are in the flow of saving money, it will become second nature and you will start seeing the benefits and achieving the goals of home owning or taking that luxury trip quicker than you thought possible.


Up Next

Tips on buying your first home

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