APPLY SOME SAVINGS STRATEGIES
Cutting back is one way to save, but there are also a number of techniques you can use to help you build good money habits.
Whenever you get some money, bank some of it immediately before you has time to think about spending it. This strategy works on the principle that what you don’t see you don’t miss.
Cutting back is one way to save, but there are also a number of techniques you can use to help you build good money habits.
Whenever you get some money, bank some of it immediately before you has time to think about spending it. This strategy works on the principle that what you don’t see you don’t miss.
PAY YOURSELF FIRST
Work out the amount you think you can save each pay period and have the money put out of reach, or at least somewhere you can’t access it immediately. Ideally, you should aim to save at least 10% of your pay.
You could arrange a direct debit, so the money comes straight out of your pay and into a savings (deposit) account or cash management account. These accounts pay a higher rate of interest, so your savings can grow even faster. Or you could use the money to reduce other debts, such as a mortgage or personal loan.
Work out the amount you think you can save each pay period and have the money put out of reach, or at least somewhere you can’t access it immediately. Ideally, you should aim to save at least 10% of your pay.
You could arrange a direct debit, so the money comes straight out of your pay and into a savings (deposit) account or cash management account. These accounts pay a higher rate of interest, so your savings can grow even faster. Or you could use the money to reduce other debts, such as a mortgage or personal loan.
MAKE MORTGAG
E REPAYMENTS MORE OFTEN
Set up your mortgage repayments fortnightly. By paying more often, you can reduce your interest costs and pay off your mortgage sooner. Many providers have online calculators that will show you how much you could end up saving.
Alternatively, you could consider paying a bit extra each period. And if interest rates rise, you’ll be able to absorb the bigger repayments more easily.
E REPAYMENTS MORE OFTENSet up your mortgage repayments fortnightly. By paying more often, you can reduce your interest costs and pay off your mortgage sooner. Many providers have online calculators that will show you how much you could end up saving.
Alternatively, you could consider paying a bit extra each period. And if interest rates rise, you’ll be able to absorb the bigger repayments more easily.
SAVE ANY ADDITIONAL MONEY YOU COME INTO
If you receive a bonus, get money back on your tax or come into a windfall, think about saving or investing this money rather than spending it. These one-off payments can really add up over time. Similarly, if you receive a pay rise, continue to live within your existing budget and increase your savings.
If you receive a bonus, get money back on your tax or come into a windfall, think about saving or investing this money rather than spending it. These one-off payments can really add up over time. Similarly, if you receive a pay rise, continue to live within your existing budget and increase your savings.
MAKING THE MOST OF YOUR SAVINGS
Once you have some savings in place, you may start to think about what to do with
them. You could put them under the mattress, but there are other options. Depending on your goals and the amount of money you have, you could begin investing.Many peoples choose to invest in property or shares, but you can also think about term deposits or managed funds – some people even invest in alternative investments, such as art or wine – there are literally tens of thousands of options to choose from.
Different investments have different characteristics. Some limit the access you have to your money, some are more risky than others and some have the potential for better returns. What you choose should relate to your personal circumstances and your goals.
A FINANCIAL PLANNER CAN HELP
A financial planner is in the best position to help you work out the most effective savings strategies for you and provide recommendations about investments which match your financial needs and situation. If you don’t have a financial planner you can speak to your bank about putting you in contact with a financial planner that can assist you. There is usually a cost involved for seeking advice from a financial planner, such as a fee or commission.
A financial planner is in the best position to help you work out the most effective savings strategies for you and provide recommendations about investments which match your financial needs and situation. If you don’t have a financial planner you can speak to your bank about putting you in contact with a financial planner that can assist you. There is usually a cost involved for seeking advice from a financial planner, such as a fee or commission.
TIP:
HAVE A LONG-TERM FOCUS
When checking performance figures on your statement, remember that superannuation is a long-term investment – so focus on at least a five year timeframe when comparing. Using short-term performance (such a
s the last 12 months) may not be a reliable indicator. But also keep in mind that past performance is no guarantee of future performance.
When checking performance figures on your statement, remember that superannuation is a long-term investment – so focus on at least a five year timeframe when comparing. Using short-term performance (such a
s the last 12 months) may not be a reliable indicator. But also keep in mind that past performance is no guarantee of future performance. TIP:
CREATE AN EMERGENCY FUND
Try to build up an emergency fund which you can dip into should the need arise. You should aim to have about three times the amount of your regular take home pay in the fund. You can then use this money if your car breaks down or if you become ill and are unable to work. Think about putting this money in a high interest account as well.
Try to build up an emergency fund which you can dip into should the need arise. You should aim to have about three times the amount of your regular take home pay in the fund. You can then use this money if your car breaks down or if you become ill and are unable to work. Think about putting this money in a high interest account as well.