When it comes to saving money, we know it can seem daunting and confusing. You know that you want to save money but just can’t seem to make it happen regularly. Please note that in this post we do not go into detail on debt and getting out of debt. I encourage you to read through this post regardless as you may obtain some ideas that WILL help you save money.
We are so glad you are here! We have been where you are now and want to help you start your journey of saving! What you will find in this post are 4 practical steps that help begin and sustain your savings journey. Stick with us as we guide you through some fundamentals that will set up your future. Be encouraged! Starting is always the hardest part, so start now! You will need to put time and a little bit of effort to make this work, but it will be well worth it!
Tip 1 | Cut down on non-essentials
You will be surprised where your money is spent on things you determine isn’t really necessary. So cut down on this non-essential spending. Some examples that we use ALL THE TIME are:
– Dining out
– Drinking out
– Ordering takeaway food
– Buying snack foods i.e. Chocolate, lollies, ice cream. (Keep your grocery list slim as well as your waist!)
– Attending some recreational and social events
So have a look at your bank statement (or credit card statement) and start marking which of your purchases are non-essential (this is definitely a personal preference so YOU get to decide what makes the cut). Once you have done this you should have a good idea of how much money you could realistically save per month if you were not to spend it on non-essentials.
Just a note; this is not to say we don’t ever eat out, get takeaways or buy snacks! It’s just that we limit how much we spend on these things. We’ve thought about it and are intentional about it. The best way to think about it is put it in comparison to what you are saving for… “Would I prefer dinner out tonight or dinner out on the Amalfi Coast in 6 months time?” It’s all about your perspective. Immediate gratification versus long term goal kicking.
Tip 2 | Research affordable alternatives for essentials
So now that you have cut out the non-essentials, the next step is find affordable alternatives to your essential purchases, or in other words finding the cheaper options!
Start with your bank or credit card statement and mark out which payments are your essentials. For us these include:
– Rental/mortgage payments
– Groceries; which grocery store are you buying from?
– Insurance; shop around and compare
– Mobile phone plans; don’t be afraid to ask for a better deal
– Electricity, water and city council rates
Remember our list might not match yours, but you will know what payments are essential for you.
Once you have your list of essential payments start researching each essential to find what options are available. It is quite common to find some competitive rates for mobiles phone plans, electricity and gas providers and insurance.
In relation to rental/mortgage payments, it’s at this stage depending on where you are financially that you may need to think about the importance of having a lower payment. You could start looking at cheaper rental properties, or for mortgage repayments have a conversation with your bank or financial advisor to consider all your options.
Tip 3 | Open a savings account (or multiple accounts)
Alright! if you’ve made it this far you are well on your way to your savings goals!
Note: I have split this step into two halves, one is if you do not have a mortgage and the other is if you do. but of course read through both parts to gain a fuller understanding!
I don’t have a mortgage
If you have not already, it is time to open a savings account with your bank (or multiple savings accounts). If you don’t know, a savings account is an account that you can put your money into that will earn you a small amount of interest every month.
Based on the information you researched in steps one and two you should now have a good idea of how much money you could be saving. This money should be placed into a savings account. This does a couple of things for you that are super helpful!
1. You will have a visual and tangible sense of your savings increasing over time! Seeing the amount increase regularly is exciting as it shows your efforts are working!
2. You will be earning a small amount of money as interest within your savings account (Don’t get too excited here it’s not much but it is still a positive)
Having more than 1 savings account can be great as you can more easily allocate your money for different things. E.g. One account could be for travel savings, another could be for car savings, another could be your grocery money allocations. It can help to have that visibility of where all of your money is allocated.
I have a mortgage
When your mortgage was set up you probably got an “offset” account, also sometimes called a redraw account. An offset account is where the money in that account will offset the interest you pay on your mortgage. E.g. if you owe $1000 and you have $100 in your offset account, you only pay interest on $900 rather than the full $1000. Which is definitely something we suggest utilising!
Most banks will allow you to have multiple offset accounts that will all work together in offsetting the interest on your mortgage. The benefit of having multiple offset accounts is that you can use them like savings accounts for different things.
For us we have more than 8 offset accounts! We have accounts for: travel saving, emergency funds, groceries, date night funds, and even an account for gifts.
Definitely speak with your bank about opening up additional offset accounts (in my opinion open as many as you can!) This will skyrocket you into saving well in your future!
Step 4 | Set up automatic bank transfers
Amazing! You made it to the last step, this step flows on from the others so make sure you’ve put those steps in place.
So you know how much you can save, you know what accounts your savings will go into. Now we suggest setting up automatic transfers into these accounts. This makes it EASY on you to save!
We set up these automatic payments to occur the day after we get paid. Once you’ve set these up you won’t have to think about transferring your money across. So just sit back and enjoy seeing all of your hard work, WORK FOR YOU. In no time you will be reaching your goals and growing your financial future. These payments can also be adjusted as you go so if you realise you want to be putting aside more into a specific account you can just alter this with your bank. We use our banking app to make this super simple!
BONUS TIP | Have a weekly spending limit
I hope you’re feeling encouraged and are excited to start saving! Here is a quick tip that Kristy and I use weekly that assist us in keeping costs lower and savings higher.
Have a weekly spending limit for yourself, and if you have a partner they should also have a spending limit. So take the time discuss what this would look like. Kristy and I started out very loose and had a rather high weekly spending amount but over time we were able to reduce it significantly based on what we actually spend during the week.
A weekly spending limit is great because you can do what you want with it! You could shout yourself a lunch out, you could head out bowling with the lads or if you’re like Kristy you could buy yourself a book. Another reason it is great is that it helps you prioritise where you will be spending that money. If you have an event on Saturday you want to attend with friends or family, you might consider missing out on the Friday night drinks.You could even not spend it one week and purchase that BIGGER thing the next week. Importantly you can use a savings account(s) or offset account(s) for your personal spending to have that visual reminder of how much money you have.
Have a fantastic day and week ahead! We would love to hear about your saving success stories so let us know below!
If you have any questions you can contact us below as well.