Most Australians consider saving money to be a difficult task. As the cost of living continues to increase, Australians need to save more than ever.
Whether you want to purchase a new car, move into your first home, or just want to have the security of extra money in your account for the future, we have compiled a list of money-saving practices that can assist you on your journey.
Create a budget
A budget is a great way to track/ plan your income and expenses while working towards achieving a financial goal. Creating a budget can help you get an idea of how much you can save in the future given your spending habits and your income for the period.
You can create a simple budget by following the steps below:
1. What is your total income for your budgeting period?
Get an understanding of how much money you have coming in from all sources of income. If you do not have a job that pays regular income, then work out the average.
2. What are your essential expenses?
Work out what expenses are necessary to pay for your essential living costs. For example, paying rent or buying fuel for your car.
3. Track your spending
Look into what you are currently spending your money on and ask yourself if those items are necessary. An easy way to cut back on spending is to stop paying for things that you no longer use but continue to pay for, like streaming services.
Tracking your spending also gives you time to reflect on your negativing spending habits like ordering fast food. Knowing your spending habits can help you become aware and prevent overspending on items that are not necessary.
4. Set your goals
Having a goal of how much money you want to save can motivate you to spend less money. Your goals should consider your total income, essential expenses, and how much you wish to save. Your goal should be conservative and should also take into consideration your ‘wants’, otherwise, you may get discouraged from maintaining your budget.
5. Adjust your budget
You should adjust your budget according to what is going on in your life. For example, if you have a kid on the way, your lifestyle will require a change in your essential expenses. This may require reducing your spending on items you don’t need to achieve your savings goals.
Plan your meals for the week
Planning your meals for the week is not only a great way to save time and reduce stress, but it also can save you money. By planning your meals, you already understand what your food expenses will be like, and you can incorporate them into your weekly budget. Knowing what you are going to cook reduces the headache of deciding what to eat for the day and gives you time to focus on the things you enjoy.
Buy in bulk
Buying your shopping in bulk is a great way to save money as it reduces the price per unit of the items you are buying. If you are consistently buying items that do not have an expiry date, why not buy them in bulk? For example, buying rice in small amounts every time you want rice for dinner can become costly over time.
Buying rice in bulk can cut your food costs down, saving you money for the things you enjoy. Purchasing perishable items in bulk is not advised as you may waste the product, meaning you lose the value of bulk buying.
Take advantage of rewards programs
There are a variety of rewards programs offered by companies around Australia that are designed to keep customers coming back to their stores. Companies incentivize customers by offering discounts on products or services when customers revisit stores.
For example, many coffee shops offer a free coffee after every 5th purchase. If you are regularly drinking coffee in the morning and don’t have time to make one yourself then taking advantage of a loyalty program can keep extra money in your pocket that can accumulate to a large amount saved over an entire year.
Make additional mortgage payments
Additional mortgage repayments can be made to reduce the total interest you pay on your home loan. Paying extra down on your mortgage shortens the term of your home loan. Shortening the term of your loan means you still pay the same amount of principal on the property, but you pay less on interest.
The additional mortgage repayments also give you peace of mind knowing that in the event you cannot work, you will not need to stress about paying your home loan. With the security and money-saving ability additional mortgage payments provide, it’s a no brainer.