Whether you’re good or bad at saving, it’s possible for most people to save more. If it’s done wisely – within the context of a budget – you’re unlikely to notice the difference. Here are some ideas:
Reorganise your bank accounts. Most people benefit by having more than one bank account – unless that is you’re an active user of revolving credit. It’s sometimes worth the extra fees to have a couple of day-to-day accounts so that your salary can be split between bills, spending and when it comes in.
Pay yourself first. The idea is that you consider your savings as a bill and pay that at the beginning of the month (or fortnight if you’re paid that way), not the end. One RaboDirect customer I interviewed recently keeps a running position statement which shows exactly what proportion of his earnings he’s saving. He starts by paying 10% into his savings before he pays his monthly bills. Then he tries to squeeze every dollar he spends so that he has money left at the end of the month to save more.
Video: How to save more
Save your bonus or tax refund. Any lump sums that find their way to you should be saved automatically. Too many people see them as a windfall and spend them on luxury items.
Bank your tax cut or pay rise. As well as saving your one-off payments such as bonuses, consider saving any increase you get to your monthly take home income, be it a pay rise or a tax cut. If you’re budgeting to live within your existing earnings, it should be easy to simply put away the pay rise.
Save your expenses. This is one that I do personally. Most of my business expenses are paid out of my personal pocket. When I get my refunds from the company the lump sum is automatically earmarked to savings and investment. The same could be done with expenses payments from your employer.
Think: do you really need it? I have a little mantra I repeat to myself every time I go to spend money. Do I really need it? It works a treat and stops the worst excesses. It also helps me reduce my impact on the planet by not consuming as much as I would if I didn’t control myself .
Hold onto that recession mentality. The RaboDirect Financial Confidence Index and other research show that we’re still spending carefully, paying down debt and building up our savings. I don’t recommend adopting a poverty mentality, but try to cherish your new found savings behaviour – assuming you have made changes.
Finally, do something strategic with your additional savings. Depending on your situation you might want to put them in a higher interest term deposit or term Pie. Or you might drip feed it into funds to take advantage of dollar cost averaging.