Updated: Jan 7
If you're like many people, saving is really hard...
Some of us are so busy in our working and family lives that we have little opportunity to enjoy ourselves so we go for the instant fix of spending money.
And while some advertising is blatant and we know we're being targeted, some of it's much more subtle. It can make us feel inadequate without their product. We can be bombarded by advertising: home renovation shows, gardening shows, cooking shows, all of which can make us want a grander lifestyle than we currently have.
But could continual spending on small items, make our larger and more important goals be less likely achieved? I found out when I reduced some of my frivilous spending early in life, it made a huge difference to my financial situation.
Have you ever wondered if you really wanted to save what strategies could you use?
I've listed below some ideas that have stopped money slipping through my fingers. Some of them may work for you if you adapt them to your situation.
1. Pay Yourself First: How would you go if rather than saving what's left over at the end of every pay, you instead paid yourself first, and saved say 20% of your pay. 10% of into superannuation so you can't touch it. And the other 10% for a large goal: maybe saving for a house deposit, an expensive holiday, a new car, etc. Then you live on the rest.
2. Five Cups for Fun: Working out a budget and dividing an income up into five sections according to the priority rating system below:
b). Bills and Commitments
c). Necessary Consumables (fuel, food, essential items, etc)
d). Savings for Larger Goal
e). Disposable Income (treats, entertainment, eating out, new clothing, etc)
Ranked in that priority order means savings come ahead of disposable income. Using jars/ envelopes/ separate no fee accounts can be a way of ensuring each section remains independent. A budget is great to inform what is available to put into each category. It might take a few weeks to save up so there's an initial surplus available to cover bills.
This was one of my son's ideas and it works really well because it gives an added incentive to save. But it also makes him feel better about spending money on himself for a treat because he knows other areas of his life are being taken care of.
3. The Snow Ball: Paying off my smallest loans first. For example: I pay off my credit card at the end of every month. The next priority after that was when we had a higher interest car loan. When it was paid off I concentrated on my housing loan.
And if I had my housing loan divided into a larger fixed interest component and a smaller variable component I'd pay the smaller amount off first then when that was paid off I'd use the extra money to pay off the larger one.
4. Having a No Spend Month: Other than absolute necessities such as bills and basic foods I don't spend any money. Ideas we've used as a family: Walk or ride to work, pack lunch from home, invite friends over after dinner rather than go out, stop drinking alcohol for a month, meet at the park for a sausage sizzle, don't go to a shopping centre for a month so I'm not tempted, etc.
If you do this you'll likely be amazed at how much money you spend on things like cups of coffee, takeaways, etc. It may even encourage you to start a savings plan when you realize you can do it.
5. Asking for the best price on any item I buy: I don't assume online means cheaper. I've been amazed on expensive items when I front up in a shop I can often get the price reduced to between half to three quarters of the marked retail price. e.g. I can recall I went shopping to buy a ring on behalf of one of our mates for his wife. I shopped around and ended up getting it for just over half the retail price, saving him over $1500. He was wrapped.
I've done the same for my son when he was buying a juicer. By asking for the best price I saved him over $180. Just this Christmas past I saved $60 for the exact same item a company had online for $159 by going into the store and asking for the best price.
Because I'm always pleasant to shop assistants (even if they can't negotiate) if they can help me get a good deal, they usually do.
And sometimes they'll know about an even better option I'm unaware of.
6. Not spending a pink one. This was one on my girlfriend's ideas and before she knew it she'd saved $625. The concept is, every time you get a five dollar note you put it aside and save it for a Large Goal.
Because I know how bad I was with money when I was young I know if my husband could encourage someone like me to save, I think anyone can do it.
Best of Luck With It.
Disclaimer: This article is generic in nature and is written from the perspective of what worked for me. It does not mean that it will necessarily work for you. For financial advice specific to your situation, go to an authorized financial planner or accountant.