If you spend more you’ll end up in debt, if you spend exactly as much as you earn you won’t ever build up any savings. Not only is saving a good way to work towards something special it’s good to have a back up in case of emergency expenses. To get a handle on this you’ll need to have a budget (see below).
No matter how small, any amount of interest you can get from a savings account is good. If you get a credit card, get one that gives you rewards. Westpac Hotpoints can be exchanged for useful gift cards which you could use yourself or stash away to use as a gift for someone.
Try to avoid using your credit card to buy anything you couldn’t otherwise afford. Try to only buy something if you have the money in your account right now. And stay ahead of the interest by paying off the balance in full every month before the charges kick in. If you have a credit card that gives you rewards, arrange for your bills to be paid by direct debit on it so you can reap those rewards more quickly. If you’ve done your budget right you won’t be charged interest because you’ll be able to pay off that balance every pay. Keep an eye on your credit card statement and balances due with online banking so you don’t get caught out.
Credit card companies are always offering good deals to switch so shop around and maybe change over. If you do get a good deal – say 1% interest for the first 6 months – use that time wisely to really try and get that debt under control.
The benefit of having more than one bank account is that you can dedicate them to different purposes; use one account for your everyday spending and one for savings. Make sure this one isn’t accessible on your Eftpos card though.
Make it a rule to dedicate part of every pay to your savings efforts.
If you get a payrise, keep living off the same budget as before and put that new extra amount straight into savings.
Loose change adds up quickly. Whenever you use cash, why not stash away the coins in a jar. It won’t take long before there’s enough in there for a special treat.
All budgeting really is is knowing where your money goes and planning ahead. You could keep it simple and split your income into chunks:
50-60% fixed costs (rent/mortgage, electricity, transport, debt repayment, phone and internet, council rates, insurance etc.)
10-20% savings (consider both short term savings like things you want to buy in the next 12 months, and long term savings like retirement and your emergency fund)
20-40% free spending (whatever takes your fancy: dining out, clothes, entertainment etc.)
Or be a bit more specific:
Start by writing down when your essential bills and expenses have to paid and how much they are. Once they’re taken care of you can either take the amount left over and decide straight away how much of it will be savings, or how much of that leftover amount you’ll limit yourself to spending and put the remaining balance into savings.
Check out budgeting apps for your smartphone – there are plenty to choose from.
Whenever you’re about to spend money ask yourself HONESTLY, “do I truly need this, or do I just want it?” You’ll be amazed at how little you actually need and how much of your spending is on items you want and once you can spot the difference the savings will really start to ramp up.
Shop around for the best price. Compare quotes and prices before shopping. Instead of throwing away the supermarket mailers, see who has the best specials for the upcoming week. Especially on things like meat.
Avoid buyer’s regret by sleeping on it instead of buying straight away.
When it comes to big ticket items, don’t be afraid to ask for a better deal and be prepared to walk away from the deal, that’s how you get the upper hand. If nothing else, see if you can get something extra thrown in for free.
“Buy 2 get one half price!” Deals that seem too good to pass up are actually sneaky ways to get you to spend more than you meant to if you were just going to buy one. Same goes for discounts. Don’t buy it just because it’s reduced unless you actually need it. Even if it’s 50% off, you’re still spending 50% more than if you didn’t buy it at all.
If you do find your debt is unmanageable don’t ignore it. There are people and organisations who can help you.