We know saving money can be hard, especially during a pandemic. But with some small changes, working towards your financial goals can become much simpler.
Whether there’s something specific you want to save up for, or you just want some cash for a rainy day, keep reading for 8 saving tips to improve your financial wellbeing.
Before you even start saving, it’s worth having a savings goal in mind. Think about what you’re saving up for (maybe a holiday, or a home loan deposit), how long you have to save for it, and how much money you’ll need to save.
It’s smart to start by being realistic about what you can afford to put aside each month. For example, if your goal is to save a $50,000 deposit to buy a property in 5 years time and you have already saved $20,000, then you’ll need to save $6,000 each year. This means you’ll need to put aside $500 each month.
Even if you just want a stash of money for emergencies, it’s still a good idea to have a goal in mind. Maybe you want to have a $5,000 emergency fund in 3 years time for unexpected car repairs, or sudden medical bills.
Once you have a goal in mind, you can work out exactly how you will save the amount of money you need. But before you do this, it helps to review your current spending.
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Regularly reviewing how you spend your money lets you see any areas where you could be saving. Once you’ve paid for your regular essential expenses (like rent, groceries and transport - things you need), the money you have leftover will often be divided between spending and saving.
For example, if you review your spending and find that you’re spending most of your leftover money on Uber Eats each week with none left for savings, it might be time for an adjustment in your habits if you’re looking to save up.
This doesn’t mean you have to eliminate all of your ‘unnecessary’ spending altogether. It might just mean you buy groceries to cook at home more often, reducing how much you need to spend on takeaway and setting aside the difference for savings.
After you decide what spending habits can stay and what ones can change, it’s time to create a budget to help you towards your savings goal.
A budget is essentially a plan for how you will divide up your money. If you’ve thought of a savings goal and reviewed how you spend your money, then you’re most of the way there!
A good way to plan a budget is to align it with when you get paid. For example, if your employer pays you fortnightly, then dividing up your spending fortnightly could be best.
Once you have an idea of your income, your expenses, and how much you need to save, you can start putting your savings aside to accumulate.
Now that you have a plan in place to save up some cash, it’s important that you maximise these savings as best you can!
A good way to do this is to put your savings into a high interest, low or no fee bank account. This way, you’re not only removing any unnecessary maintenance costs on your account, but you’re increasing your savings at the same time, usually without having to do anything.
Some savings accounts will require you to not withdraw any money to earn the maximum amount of interest on your savings. However, this can help as an extra incentive to save because you’ll grow your savings if your money remains in the account.
It could also help to find a savings account that is online only. This means you won’t have a debit card attached to the account, which makes your money less accessible, hopefully incentivising you to save more. However, there are plenty of savings accounts out there with cards attached to them if you would like this sort of flexibility.
Setting up a recurring, automatic direct debit from the bank account your income is paid into to your savings account is a simple yet effective way to boost your savings.
If you automate your savings in this way, it means that you’re not tempted to spend any money that you’ve planned to set aside and save because you won’t even see it in your account on payday.
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Another small but simple way to increase your savings without even realising it is to set up a bank account with a round-up feature. Not all bank accounts offer these features, so be sure to check with your bank.
Round-up features work by essentially taking any ‘change’ from a transaction you make from your bank account, and putting it into a savings account. For example, if you buy a coffee for $3.75, 25 cents will be rounded up from that transaction and diverted to your savings account. Some round-up bank accounts round up to the nearest $5, rather than the nearest dollar.
While round-ups aren’t going to amount to a huge amount of money over time, every little bit counts when it comes to saving.
As well as putting money aside for your savings goal whatever it may be, it could be worth also putting a portion of your money away that’s specifically for emergencies.
Having an emergency fund is a smart way to protect yourself against surprise costs like your car needing urgent repairs or having to travel unexpectedly. This way, you don’t have to rely on taking out a loan or getting a credit card to cover the costs and subsequently go into debt.
If you’re ready to get started on your savings goal, make sure you shop around for the best deal when it comes to financial products like savings accounts.
Even small differences in interest rates can add up over time, so if you want to maximise your savings, look around for high interest savings accounts.
It also helps to check the fees on financial products like savings accounts so that your future savings aren’t being depleted by unnecessary fees. There are plenty of fee free savings accounts out there, but be sure to check whether there are conditions on the account in order to have the fees waived.
If you have insurance products like car or health insurance, be sure to regularly compare your premiums with competitors to make sure you’re getting the best deal.
We know saving for a big purchase like a home can be hard work. Check out some of our other articles with tips on saving for a home loan deposit:
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The information in this post is general in nature and should not be considered personal or financial advice. You should always seek professional advice or assistance before making any financial decisions.
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