Reducing expenses and saving money might seem like an impossible task in the current climate.
We know that the impact of the coronavirus is far reaching… but there are some practical steps you can take today to help create habits that will benefit you far into the future.
Budgeting tips are not just for people with limited income… they can help everyone take control of their spending and find opportunities to save.
1. Know how much you can spend
This sounds like a very straightforward point… but having a carefully planned budget is the first step to money mindfulness and minimising over-spending. Once you have a clear picture of all your financial commitments, you can assess how much is left and determine the best way to manage it.
If your bank account is currently just a revolving door for dollars, then you need to take the time to review all your transactions and prioritise them.
Start by listing all your regular expenses – rent or mortgage repayments, bills, insurance premiums, transport costs, childcare fees… anything that is an established outgoing payment. Once you have calculated the total amount, deduct it from your income and this tells you exactly how much you have left to spend.
From the remaining amount, allocate money for other necessities such as food, clothing and entertainment, but this is where you can start to find some savings. Refining your priorities can help you to identify opportunities to cut back or even remove an expense altogether. For example… do you really need Foxtel, Netflix, Stan and Fetch TV? Perhaps just one or two services will satisfy your viewing needs.
2. Ask if there are any discounts
It’s always worth checking with your adviser if you’re eligible for any concession cards, such as the Commonwealth Seniors Health Card or Low Income Health Care Card. However, you don’t necessarily need to have a concession card to be eligible for a discount… a lot of the time you just need to ask. Many businesses will be able to offer a percentage off the ticketed price of an item… it could be an electrical wholesaler, a hardware store or a fashion retail outlet.
Simply asking “what’s your best price?” could reward you with a significant saving. And it’s not just applicable to consumer goods… ask your bank for a better interest rate on your credit card, or your internet service provider for a better deal on your monthly bill. If you have been a longtime customer, ask about the special promotions available to new customers and see if they are willing to give you the same offer. You’ll never know if you don’t ask!
3. Pay bills on time or ask about bill smoothing
Punctual payment of your bills can definitely save you money. Many utility service providers offer discounts for on-time payments… this is particularly popular with energy suppliers, so it’s always worth planning for the payment date.
Paying a bill on time can also save you late payment fees, especially on a credit card or a phone or internet account, where the fees are automatically charged once you pass the due date. However, if you do miss a payment it’s always worthwhile contacting the biller, as you can sometimes negotiate a fee waiver depending on your circumstances.
Another option is to consider bill smoothing – a system where your bill is paid in regular fortnightly or monthly instalments rather than a full amount as a lump sum. This can be very helpful for people who have a tight budget and can minimise the impact of bill shock… when a large amount is due all at once. Most billers offer this type of payment service, and you would just need to set up the process with them.
4. Shop around for service providers
Brand loyalty is great… for the brand you are loyal to… but it doesn’t necessarily benefit you, especially if someone else is offering a better deal. There are many different service providers for almost every type of service and they are all competing for your dollars, so this is where it absolutely pays to shop around.
Comparing rates, fees and service offerings may seem tedious, but if it saves you money on every bill then it is well worth the effort. You might even find that if you approach your current service provider with a quote from their competitor, they offer to match it to secure your ongoing business. For them, it’s far easier to retain a customer than to gain a new one!
5. Limit your late-night online shopping
It’s not uncommon to find yourself scrolling through a website late one evening… you see something on special and hit the “pay now” button. Research from a retailer in the UK shows that one in fifteen online purchases occurs between midnight and 6am.
This is when we recommend resisting the urge to buy. Push back on your impulses and wait until the morning to review the item you were considering. If you are still motivated to make the purchase at 11am the next day, then it’s less likely you will feel buyer’s remorse when it is delivered.
Delaying a purchase can actually be applied at any time… not just for late-night shopping. Introducing a 24-hour waiting period can be helpful for any non-essential items. This way you can really assess whether it’s a practical expense.
6. Start meal planning and buy in bulk
Going to the supermarket every day is a sure way to spend more than you need to… it’s hard to resist those point-of-sale items! Meal planning and buying common pantry items in bulk is a great way to save money.
If you know what you have planned to eat for the week, then you can shop accordingly and keep within your budget. Plus, it helps to reduce food wastage as you won’t be buying more than you need.
In addition to meal planning, meal prepping can also help curb extra spending. Allocating a few hours on Sunday to prepare meals for the week minimises the chance that you’ll call for a Thai food delivery one evening when you don’t feel like cooking. All those Uber Eats deliveries really do add up.
7. Set yourself achievable goals
Spending less is one thing… but having a financial goal in mind can help you take it to the next level. This is where you can really think about your future. Are you saving for a deposit on a house? Or perhaps you are dreaming about the trip of a lifetime. Or maybe you are starting to think about retirement and you want to boost your superannuation balance.
It’s important to have an achievable goal to work towards so that you can focus on the outcome every time you make a small change to your financial behaviour. A few dollars today can make a huge difference ten, twenty or thirty years from now.