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.
Review your budget.It’s important to review your budget every three to six months because your circumstances can change.
Create your savings plan.Once you’ve got your budget down pat, the leftover money can be put towards your savings.
Lock away your savings.You can lock all those hard-earned savings away into a high-interest savings account to help it grow faster.
Automate your savings.Once you’ve chosen a savings account, set up regular deposits from your salary into that account.
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.
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.
*Data accurate as at 01 October 2020. Rates based on a savings balance of $10,000. Introductory bonus interest rate products not included. Sorted by total interest rates. Refer to providers' websites for bonus rate conditions.
Saving for emergencies
An emergency fundis 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.
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.
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.
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.
Have a separate budget for monthly spending.Try not to dip into your savings while the interest is compounding.
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 simplesavings tips for bad saversto get you started:
Save, then spend the rest.Every payday, put a portion of your income into a savings account before tackling your bills.
Automate your savings.If you prefer not spending too much time on budgeting, consider setting up regular direct transfers to your savings account.
Shop around for savings accounts.Switch to a high-interest savings account to start earning interest on your deposits.
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.
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.
Invest your spare change.Take advantage of micro-investing tools such as Raiz, to automatically invest your spare change whenever you buy something.
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 tomaximise the value of op shopping.
Find the good op shops.Scope out the stores in your local area and decided on the ones with the best range and value.
Avoid ‘wringing it’.Go in with a clear budget in mind and you’ll find yourself saving time and money.
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.
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.
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.
Do you need it?Just because something is cheap, doesn’t make it a worthwhile purchase.
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.
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!
Op shops are more than clothes.You can certainly score some great pieces of furniture here at more than excellent prices.
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 onhow 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.
Get flatmates.Living alone has its perks but it ain’t cheap. Sharing can save you a lot of money.
Downgrade.You can live wherever you can afford to, but if you’re trying to save, consider compromising for the short term.
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.
Rent out your car spot.If you’ve got a car spot going unused, consider renting it out to make some extra income.
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:
Only pay for what you need.Don’t pay for treatments or extras that you don’t or are unlikely to use.
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.
Save by prepaying.A lot of health funds out tehre offer discounts of up to 4% for paying your insurance a year in advance.
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.
Take out cover before your 31st birthday.Otherwise, you’ll be stung with the Lifetime Health Cover (LHC) loading in addition to your premium.
Take advantage of direct debit discounts.Some health funds will reward you for paying by direct debit.
Fitness-based discounts.If you’re a bit of a gym bunny, consider a health fund that will reward you for your #fitspo lifestyle.
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.
Find out if you’re entitled to a corporate fund.If your workplace offers corporate health insurance, it could mean significant savings for you.
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.
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