Australians spend a whopping $4.2 billion online each month, according to the Australian Bureau of Statistics, and most of the time these outgoings don’t include our grocery bills, petrol costs or utilities.
Whether it be fast food, leisure, subscription services or Amazon purchases PayPal’d from the sofa at 3am; many of us are guilty of spending too much on discretionary purchases – whether we like to admit it or not.
But is it really possible to stop spending and start saving?
And how do we strike a balance between enjoying our hard-earned cash and ensuring we’re not frittering it away on frivolous spending that will break our piggy bank’s heart?
Everybody needs to save
Saving money is a part of achieving financial security and helps to minimise debt and create a safety net in the event of an emergency.
In short, everybody needs to save, and you can’t build your pathway to wealth without it.
First Financial can help you to meet realistic and achievable short-term savings goals and big-ticket, long-term savings goals.
Our team can help you determine which savings solution is right for you to ensure you’ve got the tools to safeguard your financial future with a decent nest egg.
In this article we help to get you started with five simple tips to curb your spending and kickstart your savings goals – whatever they might be!
1. Set savings goals
First up, give yourself something to aim for by setting some savings goals.
A self-confessed die-hard spender may find it overwhelming to start saving money from funds they were used to spending, but creating a tangible goal can be the best motivation to get you started on your savings journey.
- What are you saving up to buy?
- How much will you need to save to buy it?
- What timeframe do you want to save it in?
Write all of these goals down somewhere and mull them over for a few days and split them into short-term and long-term goals, if you can.
Post them on the fridge, tap them into the Notes on your phone or create a savings spreadsheet if that’s your thing, but commit to detailing exactly what your savings goals are, upfront.
2. Make a budget
Don’t overcomplicate this one.
If you feel overwhelmed by creating a budget, follow this simple guide below.
Jot down the amount you have coming in as income.
Deduct the amount you spend on essentials such as tax, mortgage repayments, bills, utilities, food and fuel in a six or 12-month period.
Don’t forget to include all of your essential spendings here, including insurance and running and maintenance costs.
Calculate what’s left.
This is the money you can spend without losing the roof over your head or starving yourself!
Eg. $100,000 – $74,000 = $26,000
- SAVINGS GOALS
Now revisit the goals you listed in Step 1 and calculate how much you will need to save to meet this goal within six or 12 months, or beyond.
Deduct this from your remainder and pay it into a designated savings account right away to reduce the temptation of using it on discretionary items later.
Eg. $26,000 – $15,000 = $11,000
The amount you have left over after deducting your savings goal money is what you have left to spend in a discretionary manner.
Whether you like to buy clothes, prefer to plan holidays or enjoy eating out regularly, these costs can now be divided up and you can spend with less guilt and stress.
3. Wait three days
Back in your days of being a big spender you probably bought whatever you felt like, on a whim, right?
Reformed spenders turned savers can often break the cycle of overspending by adding one quick rule to their arsenal – waiting a few days.
The next time you spy something you like that might break the budget, or at least carve off a hefty chunk of it, stop, take a breath and give yourself three days to think about the purchase.
Chances are, this time separation will allow you to think more clearly about the money you were about to spend (and potentially waste) on something discretionary you may later regret forking out for.
If you still can’t stop thinking about it when the three days have passed, maybe the item is something you truly can’t do without?
But most times, you won’t return to complete the purchase once you’ve ‘cooled off’.
4. Plan, pack and plot
- Plan your meals
- Pack your own lunch, and
- Plot out your spending with lists and prior research.
You’d be amazed at how fewer frivolous purchases you make at the supermarket if you aren’t shopping hungry.
Or how much money you’ll save per week by packing your own lunch or forgoing takeaway coffee for homemade.
Spend some time thinking about meal plans before you purchase groceries to avoid falling into the fast-food trap too often and write lists of the essentials you need before you go shopping to avoid wandering around aimlessly looking for ‘bargains’.
5. Review the little things - sometimes they’re big
Take stock of the direct debits you have coming out of your accounts.
Are they for goods and services that are absolute necessities?
Companies love that many of us are too time-poor to review the incremental costs of pre-paid services (we may not even use) that keep chipping away at our bank balance each month.
Take the time to review those ‘little’ outgoings. They can add up to big savings when all combined.
- How many subscription channels do you actually watch?
- How long has it been since you’ve asked your insurer for a better deal on your car, home or contents insurance?
- Is your electricity provider offering a pay-on-time discount?
- How can you ensure you avoid late fees on bills?
- Do you really know what every single one of these direct debits is for?
Evaluate your regular payments and deductions and take the time to research if you could be getting a better deal, because when you’re a saver, every little bit really does count!
Seek advice from the professionals
Sometimes you’ll need a little help with your transition from spender to saver, and at First Financial we can help make saving money a part of your everyday routine.
The team at First Financial is ready and willing to help you to explore your options for making the most of your income and maximising your savings.
Contact our friendly team today and get saving!