Savings tips can be a godsend during times of ever-growing debt, rising prices and economic uncertainty. But good savings tips seem few and far between, which is why we’ve put together a handy guide to help you save better and longer.
Saving first – spending second
Our way of thinking encourages us to prioritise regular expenses before saving the remainder of our cash. Marc Bineham, NSW director of the Association of Financial Advisers, gives us his savings tips and says that this habit needs to be kicked before you can really focus on saving.
“Once people pay all the bills, they have very little at the end of the month so they can’t save even if they want to,” he says.
A good method is to ‘pay’ yourself before anything else. “Whether your goal is to save $400 a fortnight or $400 a month, do that first before you pay your bills,” Bineham says.
“What’s left over after savings and bills is for your lifestyle.”
Pace your savings
Another pitfall in saving is being too ambitious. When someone aims to save $600 a month and doesn’t achieve it, it’s easy to lose motivation and give up. Instead, Bineham suggests starting little and then building up to capable habits.
“If you think you can save $500 a month, start with $200. Most people find after six months that they didn’t miss that money, and then they can increase the amount they save.”
Another savings tip: Stop giving yourself excuses to withdraw money by putting it away in high interest, limited access products such as online savings accounts and term deposits. This will also guarantee returns on your savings, so you can track how far your money goes.
Patience is often the secret ingredient because those who invest for the long term will usually see their savings compound over and over. It’s also more rewarding to reach a three-year savings goal than a six-month one, so those who save for longer tend to keep their good habits for years to come.
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