How to budget and save

Creating a budget helps you to identify common pitfalls like overspending. Even better, it allows you to stay on track to meet your short and long term financial goals.

Here are 11 simple steps to budgeting for the first time:

  1. Calculate your take-home pay. Write down your total income (after tax) as a monthly amount. When you’re not paid monthly, it may be easier to plan your budget over your pay period.
  2. List your expenses. These include all expenses incurred every month as well as those you may pay for on a quarterly or annual basis.
  3. Categorise your expenses. Split your expenses above into fixed and variable. Fixed expenses mostly stay the same, whereas variable expenses change from month to month,
  4. Find a budget planner. This could be as simple as an Excel spreadsheet or a budget calculator. There are plenty of smartphone apps that will budget and track every dollar you spend as well.
  5. Choose a budgeting method. A few common techniques include: the ‘buckets’ or ‘percentage’ method, the 50/30/20 method, pay yourself first and the zero-based budget. Alternatively, you can create your own.
  6. Review your budget. It’s important to review your budget every three to six months because your circumstances can change.
  7. Create your savings plan. Once you’ve got your budget down pat, the leftover money can be put towards your savings.
  8. Lock away your savings. You can lock all those hard-earned savings away into a high-interest savings account to help it grow faster.
  9. Automate your savings. Once you’ve chosen a savings account, set up regular deposits from your salary into that account.
  10. Be disciplined. It’s okay to dip into your savings every now and then when money is tight, but don’t make a habit out of it.
  11. Leverage micro-investments. Micro-investment tools like Raiz can simultaneously allow you to invest and save money.

Need somewhere to store cash and earn interest? The table below features savings accounts with some of the highest non-introductory interest rates on the market.


More details
No monthly fees
  • Download the App to open your account
  • Get better visibility of your spending within App!
  • Deposit $200 per month to activate bonus interest
No monthly fees

Save Account

  • Download the App to open your account
  • Get better visibility of your spending within App!
  • Deposit $200 per month to activate bonus interest
More details

Savings Maximiser (<$100k)

    More details

    Boost Saver

      Important Information and Comparison Rate Warning

      All products with a link to a product provider’s website have a commercial marketing relationship between us and these providers. These products may appear prominently and first within the search tables regardless of their attributes and may include products marked as promoted, featured or sponsored. The link to a product provider’s website will allow you to get more information or apply for the product. By de-selecting “Show online partners only” additional non-commercialised products may be displayed and re-sorted at the top of the table. For more information on how we’ve selected these “Sponsored”, “Featured” and “Promoted” products, the products we compare, how we make money, and other important information about our service, please click here. Rates correct as of May 24, 2024. View disclaimer.

      Saving for emergencies

      An emergency fund is money you’ve set aside – either in one lump sum or slowly over time – to help you in a situation where you need immediate access to money you might not have had otherwise.

      How much should you have in an emergency fund?

      Don’t think about your emergency savings fund having a particular dollar amount in it: think of it as covering an amount of time. Your situation might vary, but you’d generally want to save up between three and six months’ worth of expenses.

      Is insurance not enough?

      Being properly insured can provide a safety buffer in itself. Ideally, you’d have both insurance and an emergency savings account. The problem is being underinsured – either not being covered at all, or not being covered for enough.

      In addition, when you add together the premiums for health, home, life and car insurance, you’re looking at some serious out of pocket costs, and we haven’t even talked about the fact that you will probably have to pay an excess of several hundred dollars, as well as some out-of-pocket costs.

      Saving for retirement

      While you don’t need $10 million to retire, it’s never too early to start contributing towards your retirement fund.

      According to ASFA’s 2018 Retirement Standard report, to have a comfortable retirement life, retirees should have, on average, $545,000 for singles or $640,000 for couples.

      Below is a breakdown of weekly retirement expenditure:


      How to grow your savings with compound interest

      What is compound interest?

      Compounding is the process of growing or building upon itself – the snowball effect! It is interest paid on the original sum of money you’ve invested, as well as the accumulated interest on money you have invested. Put simply, compounding interest means you earn interest on your interest.

      Compound interest is calculated using the following formula:

      A = P (1 + r)(n) 


      • A = final balance (deposit + interest earnings)
      • P = deposited amount
      • n = number of times that interest is compounded

      Simple vs compound interest

      As you can see in the graph below, compound interest dwarves simple interest in its profits. But for the interest you pay (on money you borrow), simple interest is probably more beneficial.


      How to boost your savings with compound interest

      While it’s an effective way to build wealth, it’s not a get-rich-quick scheme. Here are 3 top tips you can slowly grow your savings with compound interest:

      1. Save early and often. Time is money when it comes to compound interest. Saving earlier can mean you don’t need to save as much as somebody who delays.
      2. Look at the interest rate. Shop around for savings accounts that offer good interest rate. Some also offer bonus interest rate if you meet certain criteria. It’s an incentive designed to stop you from touching your savings.
      3. Have a separate budget for monthly spending. Try not to dip into your savings while the interest is compounding.

      How to save if you’re bad at saving

      If you have a bad habit of spending every penny you’ve got but understand that living without a savings is financially risky, here are a few simple savings tips for bad savers to get you started:

      1. Save, then spend the rest. Every payday, put a portion of your income into a savings account before tackling your bills.
      2. Automate your savings. If you prefer not spending too much time on budgeting, consider setting up regular direct transfers to your savings account.
      3. Shop around for savings accounts. Switch to a high-interest savings account to start earning interest on your deposits.
      4. Restrict access to your savings. This will help reduce the temptation to spend what should be saved. You can do this through a savings account with high bonus interest rate, which is only applicable if you meet certain criteria, or through a fixed term deposit, whose interest is typically reduced by a huge margin if you withdraw early.
      5. Bank that bonus. Chuck any nice little pay rise or a big fat tax refund straight into your savings account. An increased cash flow shouldn’t always equate with higher spending.
      6. Invest your spare change. Take advantage of micro-investing tools such as Raiz, to automatically invest your spare change whenever you buy something.
      7. Keep your budget and spending in check. With plenty of free budgeting apps and online budget trackers out there that could help you in this regards, you should have no excuse.

      How to save money on groceries

      Here are some top tips to help you save more on groceries.

      1. Plan your meal. Planning what you’re going to eat and only buying exactly what you need or using what you already have will not only reduce wastage, but save you lots of money too.
      2. Buy seasonal produce. Produce is always cheaper when it’s in season, and it tastes infinitely better too.
      3. Use supermarket rewards programs. Depending on the program, you can earn rewards for your spend and/or receive exclusive discounts.
      4. Avoid recipes that use a special ingredient. Try to avoid recipes that use special, expensive ingredients like saffron. If you’re only going to use that ingredient once, it may not be worth the money.
      5. Don’t be a brand snob. We all love the better brand of pasta sauce or the more expensive feta cheese, but sometimes it pays to go for an alternative or supermarket-branded product.
      6. Check your fridge and pantry before going shopping. See what you already have at home so you don’t waste anything or let things sit in the pantry/fridge going unused.
      7. Shop online. Shopping for your groceries online is not only more convenient, it also stops you from buying stuff ‘just because’ as you’re not being tempted by the lures of the chocolate aisle.
      8. Grow your own food. Growing your own produce is a great way to save money, and it always tastes so much better than what you can buy at the supermarket.
      9. Cut down on unhealthy food. Everyone can benefit from cutting down on the amount of unhealthy food they eat, like soft drinks and sugary snacks.
      10. Check the unit price. Even if something appears to be cheaper or on sale, check the unit price and the quantity/volume you actually get for that price.

      See 10 more tips on how to save money on groceries.

      Save money by op shopping

      Aussies donate over a million tonnes of goods to op shops. It’s clear they’re a much loved national staple, but how best can we take advantage of them? Here’s a list of tips and tricks to maximise the value of op shopping.

      1. Find the good op shops. Scope out the stores in your local area and decided on the ones with the best range and value.
      2. Avoid ‘wringing it’. Go in with a clear budget in mind and you’ll find yourself saving time and money.
      3. Shop mid-week. Donations typically come on the weekend while volunteers usually don’t get around to sorting through these until Monday or Tuesday. Shopping mid-week can give you a head start on bargains while also allowing you to avoid the crowds.
      4. Take your time. An op shop isn’t a department store where everything is neatly folded, hung and categorised. It’s important to be patient and understand that what you’re looking for might not be readily available or jump out at you.
      5. Try before you buy. Op shops don’t usually offer refunds, so do some DIY quality control and ensure that your purchase is up to scratch and you’re not throwing your money away.
      6. Do you need it? Just because something is cheap, doesn’t make it a worthwhile purchase.
      7. See something you love? Don’t hang about! Employ the “do you need it” test and should the item pass, buy it. If you leave it for another day, someone will no doubt swoop in before your return.
      8. Don’t be restricted by gender or age. Different donations from different decades mean that clothes sizes can actually be a terrible indicator of what does and doesn’t fit. Same goes for gender. Whatever tickles your fancy, try it on!
      9. Op shops are more than clothes. You can certainly score some great pieces of furniture here at more than excellent prices.
      10. Revisit! People donate their belongings to op shops every single day, which means new items 24/7! Consistency and repetition are the keys to frugal success.

      How to save money on rent

      While there’s no hard and fast rule on how much you should spend on rent, the sweet spot is generally 25% of your income, and ideally no more than 30%. Spending any more than 30% of your income on rent is widely considered an indication of housing stress.

      If you’re spending too much of your income on rent, here are 5 ways you can save more, short of moving back in with your parents.

      1. Get flatmates. Living alone has its perks but it ain’t cheap. Sharing can save you a lot of money.
      2. Downgrade. You can live wherever you can afford to, but if you’re trying to save, consider compromising for the short term.
      3. Negotiate for lower rent. If you find somewhere you really like and can see yourself living there for a while, try negotiating a longer lease in return for a reduction in rent.
      4. Rent out your car spot. If you’ve got a car spot going unused, consider renting it out to make some extra income.
      5. Take advantage of any extras. If you’re comparing apartments, make sure to factor in any building amenities as well.

      How to save money on health insurance

      Here are the top 10 tips on how to save money on your health insurance:

      1. Only pay for what you need. Don’t pay for treatments or extras that you don’t or are unlikely to use.
      2. Take advantage of switching periods. Shop around in peak periods, often March or June, when Aussies look for health cover, to score a range of bonuses and incentives, as health funds are trying to win over new customers.
      3. Save by prepaying. A lot of health funds out tehre offer discounts of up to 4% for paying your insurance a year in advance.
      4. Ignore sign-up perks. Don’t take out a policy you don’t need or can’t afford just because it comes with free gifts.
      5. Take out cover before your 31st birthday. Otherwise, you’ll be stung with the Lifetime Health Cover (LHC) loading in addition to your premium.
      6. Take advantage of direct debit discounts. Some health funds will reward you for paying by direct debit.
      7. Fitness-based discounts. If you’re a bit of a gym bunny, consider a health fund that will reward you for your #fitspo lifestyle.
      8. Consciously uncouple. A couple’s health policy is no cheaper than two singles policies. If you’re on a couple’s policy, you’re probably paying for things you don’t even need, as it requires both people to have the same level of protection.
      9. Find out if you’re entitled to a corporate fund. If your workplace offers corporate health insurance, it could mean significant savings for you.
      10. Pay a higher excess to reduce your premium. Keep in mind that your immediate out-of-pocket expenses will be higher if you use this strategy.

      See 10 more tips on how to save on your health insurance.

      How to save money on the costs of owning a pet

      According to ASIC, the average pet owner will fork out between $3,000 and $6,000 in the first year, and just over $1,000 for every year after that. Here’s how you can reduce the costs of pet ownership:

      • Adopt, don’t shop! Buying a pet from a breeder is typically more expensive than adopting one from animal shelters, which has often already been vaccinated, desexed and wormed.
      • Take out pet insurance. This may hurt your hip pocket in the short-term, but could provide long-term protection against unexpected medical expenses.
      • Buy pet food in bulk. Buying bulk typically means better price. Take advantage of that, especially if your pet is a massive eater.
      • Keep your pet fit and healthy. This will help avoid much bigger bills for preventable, and often expensive, obesity-related health issues down the track.

      Guide to managing money at any age

      If you think money management is too hard to handle, here’s your chance to tick off some life admin and finally get on top of your finances. Below are some tips on managing money in your 20s, 30s, 40s, 50s and 60s:

      In your 20s

      • Make a budget and start savings
      • Pay off your student debt (if any)
      • Start making superannuation contributions
      • Save for emergencies
      • Start saving for a house deposit
      • Start investing

      In your 30s

      • Keep your finance in check before applying for a home loan
      • Negotiate your salary or a pay rise
      • Review to ensure you have the right super fund for your needs
      • Shop around for insurance
      • Increase your emergency fund
      • Save or invest more of your income

      In your 40s

      • Start saving for retirement
      • Protect yourself and your ability to earn, either through taking out a life insurance or income protection
      • Increase your mortgage repayments to pay off your mortgage faster
      • Enjoy your ever-increasing salary or your recent pay rise, but be careful not to cave in to ‘lifestyle creep’

      In your 50s

      • Cut costs where you can to fast track your savings
      • Zero in on your retirement plans and get real about what you want your retirement to look like

      In your 60s

      • Give your retirement a practice run to see if your plan will actually work for you in the long run
      • Evaluate if you can live off the income you plan to live on in retirement
      • Plan your legacy, prepare your will, power of attorney and living will