The almost flat growth of wages and increasing living costs in Australia have made it harder for people to save more money. Most of the time, there is just no way to stash extra cash after paying the bills and buying all the household necessities each month.
To help you better manage your expenses and slowly build your savings, we compiled a few practical tips you can use to set aside money for potential emergencies or invest valuable assets.
1. Create a Budget
Budgeting is an effective way to plan out your expenses and identify what you want and need to prioritise. Check your bills, bank statements, and receipts and list down all of your monthly expenses, such as rent, insurance, and payable loans.
Then, be firm about which expenses are necessities and which are superfluous. From this setup, it will be easier for you to set aside the money you will otherwise spend on things you can do without.
Since your circumstances and earnings can change, it is best to update this budget on an annual basis so you can be prepared for unexpected expenses.
2. Open a Savings Account
Savings accounts offer a higher interest rate compared to a regular bank account. And you can get away from the temptation to spend extra money by scheduling automatic transfers from your payroll to this savings account.
Occasio Enterprises CEO Kylie Travers, the owner of multiple personal finance websites, even advises to round down your payroll account balance to get additional money to be put in your savings account. For example, if you have $237 in your main account, transfer the extra $37 to your savings account. Before you know it, you will have accumulated more savings than you realise.
3. Pay Your Credit Bills on Time
Credit card interest rates in Australia can go up to 25 per cent, so you must exercise tremendous discipline before you swipe yours for a purchase. For you to avoid incurring interest and late-payment charges, always pay your dues on time and in full.
If possible, it’s best to set up a payment plan directly from your debit card and take note of how much will be paid to your credit. This strategy pushes you to be mindful of your expenses and prevents you from going beyond what is set for credit dues.
4. Track Your Spending
There is a common misconception that buying expensive items is the main culprit behind financial problems, when in fact, it is the little things that accumulate over time. This is why it’s imperative to track your spending and ensure that you do not live beyond your means. Stick to your budget and determine which expenses you can limit or even slash entirely. This way, you also avoid bending to impulse buying.
Another creative way to make credit card usage benefit you is by using it more. However, you need to carefully note the specifics of your card, as this can be tricky. This strategy only works if you pay your credit card bills in full and on time per month. Choose a credit card that has an excellent cashback program and redeem the rewards now and then. Put all money you get as cashback into your savings account, and do not touch this money unless there is an emergency.
With the growing costs of living anywhere in the world, saving money has become more and more difficult. However, with the simple tips outlined here, we hope you can find more ways to set aside even a little bit each month for your emergency and investment funds.
Are you looking for a personal financial adviser? Swell Financial Planning is here for you. We offer financial services, including investment advice, insurance, budgeting, superannuation, and more. Get in touch with us today!