Need a plan to save for a big event this year?
Statistics show that around 30% of Australians have less than $1000 available in emergency savings and more than 12% have less than $100 on hand. But saving doesn’t have to be hard. In fact, by using a few simple strategies, you can start saving straight away!
Set a goal
Think about why you want to save. Are you planning a holiday? A renovation? A new home? A new car? Want to pay off your mortgage? Need to put money aside for next year’s school fees? Having a clear financial goal with a purpose helps you to focus on why you’re saving.
A goal will also help you determine the amount you need to save and your timeframe for reaching that amount. Goals work best when they’re realistic, measurable, achievable and have a set timeframe for completion.
For example, your goal could be to save $20,000 to take the family to Disneyland in August 2018.
Setting a specific goal is much more effective than having a vague goal like “Save some money so we can go for a holiday someday.”
Set a budget
The next step is to look at your budget. List everything you need to spend money on each month and the amount of money you bring in each month. Outlining your income and expenses helps you to see where you’re spending too much and where you can save money.
If you have a joint account, it’s important that you’re both on the same page when it comes to finances. This can be a great way to create ownership and a shared goal.
Once you’ve figured out your income and expenses, there should be 10% or so that you can realistically put aside for saving once you’ve paid all your expenses and bills.
If you don’t know where to start, there are lots of simple budget templates or apps online that you can download.
Make it happen
The best way to start saving is to make it as easy as possible! Automating your payments so that a small amount is transferred at the same time each week or month is the best way to make saving easy.
Here’s how:
- Work out how much you’ll need to save each week or month to reach your goal. To reach $20,000 over 2 years, you would need to put away $833/month.
- Set up a separate bank account that you can’t access easily
- Use your online banking to set up weekly or monthly scheduled payments
Set up one of these accounts that you can't access easily
It’s best to schedule the payment to happen the day after your regular pay goes into the account, especially if your pay goes in monthly.
Ensure that you don’t try to save too much. If you run out of money, you’ll be tempted to tap into your savings, defeating the purpose.
You can also use this strategy to stay ahead of regular bills such as council rates, electricity, gas and water.
You may find that you can put away more money some months than others, and you definitely should when you can. It will help you reach your goal faster. Alternatively, there will be some months where you won’t be able to save as much as you’d like. Perhaps an unexpected bill has come in or you want some extra money for Christmas. This is normal so don’t stress too much about it. Simply log in to your online banking and adjust your payment amount for that month. Saving money is a strategy to help you get ahead and should be fun. It’s not designed to make life more difficult.
That’s all there is to it. It’s pretty simple really but can be extremely effective at helping you save strategically without having to worry about it.
Picture: Shutterstock
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Peace Mitchell
- Director of Women's Business School
- Has four businesses and five children
- Spends her free time daydreaming about travelling to exotic destinations
