When it comes to saving, every tiny amount you put away can make a huge difference. There are many benefits to saving – planning for the future, having access to money in case something unexpected happens and achieving your financial goals among others.
To help you achieve those goals faster, here are some effective tips on boosting your savings.
Revert to cash
We may be rapidly moving towards being a cashless society, but one of the most effective ways to reduce unnecessary spending and boost your savings is to go back to using cash, according to Dominique Bergel-Grant, director of Leapfrog Financial and a committee member of the Association of Financial Advisers’ Inspire initiative.
“[Visa] payWave is a great technology but we all lose track of where the money is going – we don’t even notice where the money is going until we get the credit card statement,” Bergel-Grant says.
For spendthrifts who struggle with the discipline of saving, Bergel-Grant recommends withdrawing a set amount of cash to last you for an entire month then handing over your debit card and credit cards to a trusted friend to prevent you from spending more than the monthly budget. “My clients see the benefit of this approach, although it can be a bit painful by the time you get to week three,” she says. “Try monthly first and once you develop the discipline, go down to withdrawing cash for a fortnight then weekly.”
What do you do with tax returns, Medicare reimbursements, bonuses from work or the odd inheritance? Most of us are likely to spend it, but windfalls such as these can be a great way to boost your savings and earn you more interest along the way. And because you won’t have to make any spending sacrifices to put windfalls into your savings, you won’t even notice you’re doing it.
If you don’t already deposit your savings into a high-interest savings account, research your options to maximise the interest you earn. At the time of writing, RateCity lists savings accounts with rates up to 4.6 percent interest.
Once you have saved a lump sum, you could also consider moving your savings into a term deposit and start earning a decent amount in interest straight away, she says.
You may be paying thousands of dollars a year on things you don’t use or could do without. Whether it’s an unused membership, mazagine subscriptions, website memberships or pay TV, it pays to regularly review all subscriptions and memberships and cancel any unnecessary ones. “Look at all direct debits coming out of your account and see what you need and what you can cut,” Bergel-Grant advises.
Minimise takeaway meals
Eating out is fun and no one is asking to you give up your social life. But grabbing breakfast on the way to work and a daily takeaway lunch can have more impact on your hip pocket than you realise. Let’s say you spend a modest $5 a day on a morning coffee and raisin toast, and $10 a day on lunch while at work. Over a 48 weeks of the working year, that comes to $3600 you could be adding to your savings instead.