Most people can save for a holiday, or a new sofa – the small stuff is easy. So why is consistent long term saving such a struggle?
We believe that saving is a skill that can be mastered with a few simple principles and a good dose of discipline. Here’s our top 5 tips to get your savings on track.
1. Understand your cashflow
You don’t have to count every penny, but it’s important that you have a clear idea of what’s coming in and how it’s being spent.
Take half an hour to look at your bank statements – you might be surprised to see just how much of your income goes on non-essential items. The idea is not to cut these out entirely, but to decide which costs can be trimmed.
2. Pay yourself first
Rather than trying to spend less, make saving a certainty by having it done automatically.
The easiest way is to have a portion of your pay go directly off your home loan, and you will quickly notice the impact it has on your monthly interest bill – compounding the benefit of your savings.
3. Don’t overcommit
This is really important! We don’t make big financial decisions every day – a new car, or a new house, are big ticket items. Overspending on these items not only means we have less discretionary income to spend on life’s comforts, but it also reduces your ability to save for the next big thing, creating a cycle of weak savings.
4. Lookout for leakage
Interest payments and income tax are two big financial outlays, and they can fly under the radar. Talk to us about ways to reduce these costs so that more of your hard earned dollars are working for you.
5. Make your pay rise work harder
If you were getting by okay before your pay rise, then you can probably afford to save some of the increase – try saving half of your raise with some form of automatic saving such as extra superannuation contributions or loan repayments.
Time is on your side
These simple saving tips won’t transform your finances overnight, but they work for everyone, are simple to implement, and with discipline they will dramatically improve your position over time.