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For many, the past two years have been a nightmare when it comes to finances. Because of the pandemic, people have had to deal with unemployment, salary reductions, and other financial losses, so saving money in a time like this might seem a little unattainable for many Australians.
However, according to a 2020 Financial Literacy Survey conducted by Savvy, 29.4% of respondents always put money aside for savings, future purchases, or emergencies. Additionally, 51.3% of respondents pay their credit card bills on time and 41.75% use banking apps to keep track of their expenses.
These are all great stats, and it’s easy to get on board the savings train. By putting more thought into the process, you can definitely achieve your money-saving goals – and to get started, here are some tips that can help you amplify your chances of successfully saving money.
The first step towards saving money is to understand how much money you make and how much you spend. Knowing these basics will make it easier for you to build a comprehensive savings plan that suits your needs.
You may already use notebooks, spreadsheets, or a more modern solution like a budgeting app, such as Budget Direct Money Manager and MoneySmart. In this way, you will be able to better understand your expenses, which will allow you to cut costs and provide more possibilities for saving money.
With an average interest rate of nearly 20% on credit cards in Australia, it’s easy to see how the impulsive use of a credit card can sabotage even the most modest of savings goals.
According to Budget Direct, you can avoid late-payment fees and interest charges by paying your credit card bill in full and on time. If you pay more than the minimum required, you can avoid paying a lot more later in interest. According to Andrew Schrage, co-owner of Money Crasher Personal Finance, using your credit card more would be a creative way to save more money.
This tip only applies to those who pay off their balance on time and in full every month. Find a credit card with a stellar cash-back rewards program and every few months redeem your rewards and then put that amount of money into a bank account you have set aside for savings only.
In her book All Your Worth: The Ultimate Lifetime Money Plan, US Senator Elizabeth Warren popularised the ‘50-30-20 budget rule’. The rule calls for 50 percent of your pay to go to your needs, including rent and utilities, 30 percent to your wants, like travel and eating out, and 20 percent to your savings. This can be more of a guideline than a rule, and you can tweak it based on your needs and goals, but it’s a great baseline to get your finances on track.
One of the easiest ways to save money is to plan your meals. By planning what you are going to eat each week, you can go grocery shopping with a list and only buy items you actually need. This helps you avoid overspending on food and wasting food as well.
A great way to save money on groceries is to check and compare the major supermarket specials.
According to canstarblue.com.au, the Australian state Victoria recorded the second-lowest average weekly grocery bill of $147, or $588 per month. According to our most recent survey, Victorians tend to purchase more pantry items (51%) and frozen foods (45%) at the grocery store than people in other states.
Saving money does not mean you have to stop buying things you love and avoid spending money on activities you enjoy. However, you can make it more effective by making the purchases a reward for your efforts towards achieving certain saving goals.
By delaying that purchase, you're giving yourself more time to save for that special splurge or treat-yourself item.
While all of these tips can be helpful, none of them are hard-and-fast rules – we’ve all got to adapt our strategies to our own situations. Nevertheless, we hope you found this guide to saving money useful!
If you liked this article, you might like our feature on more sustainable banking.
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