Saving just a small amount of money every week, month or year can have a large impact on your ability to achieve financial security and every single one of your financial goals? But, while it’s one thing to say you’re going to save money, it’s another thing entirely to do it.
The temptation to overspend and purchase things you simply do not need is stronger than ever. But becoming a disciplined saver is a skill that will serve you well both now and well into the future. We’ve worked to simplify the process of budgeting with these tips from our team of expert financial advisors.
How To Get Started
While achieving a large savings goal might seem overwhelming to start with, you can help make it feel more manageable by breaking it down into smaller, more achievable goals. This way, you’ll know exactly what you want to achieve financially in the timeline you have.
The next step towards a successful year financially is to set yourself a tight budget tailored to your specific financial circumstances that will help you to achieve these goals. Consider using a budgeting app, like My Wealth Portal, to help you stay on top of your expenses and gain a clearer picture of your spending habits. Having a budget you can access in an instant will also help you to eliminate any unnecessary purchases of luxury items that may tempt you when your wallet is particularly plump.
Another great way to encourage regular savings is to set up a separate savings account where you can easily deposit money but will have more difficulty withdrawing it. Once you have your savings account in place, set up an automatic transfer for just after you get paid to ensure you’re regularly contributing to your savings and subsequently a brighter financial future. Just be sure that you’re staying on budget and don’t end up overdrawing!
Review Your Home Loan & Insurance
Saving money doesn’t have to be just about keeping to a tight budget, a great way to save money is by reviewing your insurance and your home loan. Take this opportunity to check your mortgage and insurance policies against the competition to see if you can find a better deal. A little bit of extra work now can mean huge savings in the long run.
When it comes to reviewing your home loan, consider the different rates, fees and features of your current policy versus the competition. If you find a better deal, speak to your lender and see if they can match or beat it, and if they can’t, don’t be afraid to switch lenders!
Review all of your different insurance policies, including but not limited to your car, home and contents insurance, life insurance and income protection cover, taking the time to compare the price and features of your policies against those offered by other providers. If you find a better deal, don’t be scared to make the switch to a different insurance provider.
Feel like you could benefit from a review of your current mortgage and income protection insurance? Our team of financial advisors is here to ensure that your current protection is working hard to ensure you’re on track to achieve your financial goals.
Pay Off Your Credit Card
For many, managing credit card debt has simply become another aspect of their financial world. But paying off these debts beyond the basic monthly requirements can save you from years of having your potential wealth diminished by interest payments.
Your monthly credit card statements will show you how long it will take you to pay off your credit card if you are to meet the minimum requirements. However, the more you pay off on your card each month, the more you’ll end up saving in the long run.
Here’s an example. In this scenario, there is $5000 owing and the interest rate is 18.00%. You can save $11,279 by making higher repayments.
Taken from ASIC’s MoneySmart. For more detail on the assumptions of this scenario please visit their website.
You might also like to consider lowering your credit limit to something more manageable that you can pay back within a few months. Remember that more cards can mean more debt, which can create more stress. Failing to pay off your debts can also damage your credit history and make future credit card and other financial applications, such as a home loan or rental applications, much more difficult.
But, of course, being able to make extra payments may feel like a pipe dream when you’re struggling to manage every aspect of your financial world. Luckily, this is an area where having an experienced financial advisor by your side can help. There are a number of strategies that a financial advisor can work with you to put into place that will ensure you’re able to turn this dream into your future reality.
Consolidate Your Debt
If you have multiple sources of debt, you’ll also be paying more than one type of interest on your repayments. In this case, one of the fastest ways you can remove debt and save more is to consolidate your debt into one loan.
Consolidating all of your debts into one debt means cutting down on the interest you’ll be required to pay and allowing you to focus on managing one debt, rather than multiple smaller loans. The clarity this brings then becomes an essential tool in helping you not only to strategise how you’re going to pay off this debt but also the timeline it may take you to get there.
For those of you with credit card debt, you could also consider working with your financial advisor to set up a credit card balance transfer. This will allow you to transfer a set amount of debt to a credit card with a lower interest for a period of time. In order to fully reap the benefits of a credit balance transfer, it is crucial to pay off the entire amount of debt that was transferred within the designated period.
You could also consider consolidating your credit card debt onto a card with a low-interest rate that’ll enable you to save money over time. For example, if you owe $1000 to Lender A, which is accumulating at 5% per year, and you owe $1000 to Lender B, which is accumulating at 10% per year, you will likely be better off transferring all of your debt to Lender A. This lower interest rate offered by Lender A means that your debt will grow at a lower rate over time. In fact, in this example, by consolidating your debt, you’ll end up saving $50.
But, this being said, debt consolidation is not something that should be taken lightly; you are essentially taking out one, larger loan to cover your existing debts. That’s why it’s essential to seek the advice of an experienced debt advisor before making any financial decisions, as they can help you understand your current financial situation and chart the right way forward based on your unique circumstances.
Make the Most of Discounts
Being an efficient saver means finding ways to pay less for the same goods and services that are being utilised by everybody else. Buying in bulk, buying things that are on sale, and buying things that are used are all great ways to save on common consumer goods.
Taking advantage of credit card specials–such as those offering 0% interest for the first year or reduced interest for students– can help you avoid paying more interest over time. Additionally, automatic discount apps such as Honey make it easier to save without having to do any extra labour.
Split Costs When You Can
It’s no secret that in 2023, sharing has become the new norm. Ride-sharing apps like Uber allow you to split the cost of a ride home. You can even hire a car by the hour with apps like Uber Car Share. Same as eating out, you’d likely split the bill when eating out with friends so app like Beem it is another great tool to track your budget!
Achieving financial freedom doesn’t have to mean foregoing the little luxuries that give life character. It just means finding a more cost-effective way to enjoy them. That’s where splitting costs with your friends and loved ones comes in.
Been eyeing off that expensive new appliance but know you’re only going to use it occasionally? Ask around with your neighbours or nearby loved ones and see if they’d be willing to split the cost with you in exchange for sharing said appliance. You and a friend both desperate to play the latest game everyone’s talking about but don’t have only room left in your entertainment budget? Split the cost of it and share!
Splitting costs can not only enable you to save a little bit extra, which in turn will help you to achieve a brighter financial future, but it can also help you to strengthen your relationships with your loved ones.
Get Expert Help
At My Wealth Solutions, we firmly believe that education is the key to financial success, as well as having the right team of financial professionals by your side. That’s why our financial advisors strive to make sure that not only are you receiving expert guidance, but also that you’re getting the education you need to make smart financial decisions for your future.
While exactly what your financial team looks like will depend on your particular financial circumstances and needs, at the very least it should include an accountant and financial advisor you trust. By working together, as well as with you, your accountant and financial advisor will be able to plan a path to get you where you’d like to go and ensure you stay on track to achieve it.
They also act as your go-to sources of financial information, so you’ll never have to spend a night worrying about whether a decision is right for you or if you could be doing more to achieve financial freedom. With the right team of financial professionals at your side, achieving financial freedom is simple.
Specify Your Necessities
Most families in Australia end up spending money on things they simply do not need. By cleverly cutting out wasteful spending, your monthly deficit can immediately decrease.
Avoiding unnecessary expenses doesn’t just mean going out to dinner less often or purchasing fewer luxury items. It can also involve avoiding fees, charges, and interest rates that are associated with some of the most common financial assets on the market.
Owning a redundant number of credit cards, paying avoidable ATM fees, and owning an undesirable mortgage are just a few of the common ways many individuals end up paying more than is necessary.
If you are hoping to avoid these redundancies, then you need to decide what your priorities really are.
Use The Right Travel Cards
If you are someone who travels a lot, an easy way to save money is to find a credit card that is compatible with your lifestyle and doesn’t charge you fees while travelling. Frequent ATM fees are an unnecessary expense that can accumulate quickly, as are credit cards with high surcharges for international purchases.
If you plan to travel a lot, or already do, make sure you take the time to research which credit card option is right for your needs. Or, ask your financial advisor if they have any recommendations based on your particular financial needs.
Find The Right Bank
Many individuals end up with high-interest credit cards and low-interest bank accounts simply because once they are committed to a given institution, they can no longer be bothered to change. But by shopping around and carefully examining other options, you may be able to find a way to pay less or earn more.
These are just a few ways you can give your monthly budget a creative revitalisation that will make things easier in the new year. There are a lot of incredible savings opportunities out there that can be easily accessed by almost anybody—you just need to know where to look.
Optimise Your Savings Account
Naturally, one of the most common places people go to store their money is a bank. Banks are particularly popular financial institutions because they are easy to access and all Authorised Deposit-taking Institutions (ADIs) are insured by the Australian Government for accounts up to $250,000.
But while banks and the savings accounts they offer may seem to be similar to one another, the differences can be significant. Consider these factors when choosing your savings account.
What are the interest rates that are currently being offered?
If a certain bank is able to offer a higher interest than the one you are currently using, you might consider opening up a savings account with them.
However, remember that usually your savings will have to be contained in your account for a long period of time in order to make the most of any interest rates . That means that you should consider long-term growth when thinking about making the switch to a different savings account.
Does my bank have any sort of minimal requirements?
Make sure you are away of minimum requirements to receive the maximum interest rate. Usually this might involve transferring a certain amount of money into the account per month, or holding a certain amount of money in the account without making withdrawals.
What are the different fees that are associated with my bank?
Holdings requirements, transfer fees, and convenience fees are just a few of the common ways banks will try to get you to pay more over time. Before you switch to a new account, thoroughly go over these details and weigh whether the benefits of switching your account outweigh the negatives of your current account set-up.
Which bank offers the best mixture of risk and reward?
Though your deposits are indeed insured by the government, that doesn’t mean they aren’t without risk. Fees, logistics, and access to credit are all different types of “risks” that are associated with a given bank.
Monthly interest rates, customer benefits, and access to financial services are all different kinds of rewards that can be associated with a savings accounts. Due to various regulatory and reporting standards that have been established by the government, each of these risks and rewards should be fully disclosed upon inquiry.
Start Today to Reach Financial Freedom
Though it may seem that the most obvious way to save money is to simply buy fewer things, there are still many ways to save that don’t require any material change. By being conscious of the options you have as a saver, you will effectively “earn more” by saving on unnecessary fees.
But, like any aspect of your financial world, creating a way to save more and work towards achieving financial freedom can feel overwhelming when you tackle it on your own.
When it comes to gaining financial freedom, taking the time to review, monitor and better manage your money is an essential step.
Seeking professional financial help is another. By having an experienced financial advisor in your corner, you’re ensuring that all of your bases are covered and you’re prepared for whatever unexpected challenges may arise.
We’re here to help you create a savings plan tailored to your particular financial circumstances as we work together to bridge the gap between where you are now and where you’d like to be. With our team of financial advisors by your side, this could be the year you transform your finances.
