Some experts suggest people should save up to 30% of their income. But this goal is lofty. The majority of punters will find this unrealistic with the cost of living now. Consumers struggle to put food on the table, let alone put savings away each week.
1. Don’t leave yourself short
No individual, couple or family like to leave themselves short. So many people are living ‘week-to-week,’ with some even relying on credit to get there.
Putting savings away isn’t always the best option either. If funds are of better use elsewhere, locking them away can be detrimental.
2 Expect the unexpected
Maybe your fridge just died like mine did?
You will need to replace this big ticket item quickly. Otherwise, you’ll have the drama (I’m having) of not being able to do full grocery shops. Don’t worry. We’re on this mission now!
But not everyone has the money to replace a broken appliance immediately. Instead, call a company who offer expert repairs and cooking appliance services.
Tip: This can work out a more affordable than replacing the unit altogether.
Either way, you may have to dip into current savings or not save at all this month.
3. Save an emergency fund
If you were smart, you would have an ’emergency fund’ saved for these unlikely events. If you do have an emergency fund, you’ll be ready for issues like this as they occur.
Tip: Deal with problems like this as they happen. Otherwise, you’ll get a false sense of your finances. You risk even spending your precious fridge or ‘fix-your-fridge’ money.
The same applies to any other big ticket items. You might need holiday spending money or to pay for a child’s after-school activities.
Here’s one scenario to avoid:
Set aside too much money into a long term savings account
Realise you need a big ticket item
Use your credit card to survive until pay day
Have to pay fees to pull your money out of savings
4. Go on a mission to clear your debts
Got debt that’s accruing interest, such as credit cards or store accounts? Clear all debts before starting to save money. This just makes financial sense.
Here’s another scenario:
Invest $1000 in savings account that increases to $1,020. Note: This can be more if you find a better deal, but rates are still hovering below the 2% mark.
A debt of $1,000 (at an average of standard rates 13.99%) will cost you an extra $399 per year roughly.
Better to take the $1000 in savings and clear the debt!
Tip: If you have debts on 0% deals, then you’re good-to-go – of course. Just make sure you keep up-to-date with monthly payments. Otherwise, you’ll pay the price when the standard interest rate kicks in!
5. Shop around
Make sure you get the best deal on the one savings account you have. Shop around and make sure your savings account is working for you. Many online banks are a great solution because many don’t charge bank fees. If you get an account like this you won’t be eating up those savings in monthly bank fees. This is counterproductive.
6. Make an effort
Anything great requires effort. So learn the best ways to save and pay attention to your money. If you don’t do this, you might as well walk up to a rubbish bin and throw your wallet in there.
This is especially true if you go with a savings account linked to the stock market. You need to set time aside for watching rates. Hunt down better account deals and make the most of the money you’ve set aside from everyday expenses.
7. Form a money-saving habit
Tip: Saving money is a great habit. Even if it’s $10 a week. If you ever apply for a loan the banks will love that you’ve made the effort.
They like to see a ‘track record of saving money.’ Saving money is better than having the money and frittering it away in a random spending attack.
8. Be realistic
Weigh up your options. Put a little away and also look how you can get your money working for you.
Here are two ways:
1. Put extra into your superannuation or mortgage
2. Throw your money into a home renovation
3. Spend extra each month on bulk cooking to save each week
There are many ways to ‘save money’ and they aren’t always as obvious as ‘putting money in a bank account.’
Thanks for listening and happy saving, whichever path you choose!