Have you ever wondered how much money you can save in a year?
It’s a particularly interesting question when you’ve reached a certain stage in life, for example, if you’ve started to draw-down on your super or get the age pension.
You may find that younger people make the false assumption that you have achieved all your financial goals, thinking you can now take it easy and splurge on all those indulgences. Yet the reality in retirement is that the bills keep coming only your pay packet doesn’t! And in this low interest rate environment, your savings and investments might not be earning as much as you would have hoped.
Now, more than ever, it’s healthy to practise smart money habits so you can live the life you’ve planned for this stage in your life. From day-to-day budgeting to considering options to generate income, make it a priority to grow your savings this year.
Even if you only manage to save a small amount each week, it will quickly accumulate over time. We all know the saying that if you take care of the pennies, the pounds will take care of themselves!
1. Start by setting a goal
Goal setting is vitally important because it sets your motivation and quantifies how much you need. As the saying goes, a dream without a goal is just a wish.
Just imagine what you could do with those extra savings!
Maybe you’d like to pay someone to help you take care of those things around the house that are becoming too hard, like mowing the lawn or doing the vacuum cleaning.
Or maybe you need to spend some money on your home to make it safer and more comfortable, like a new kitchen or bathroom.
Or perhaps there’s something you’ve longed for in your heart like an original piece of art, fine jewellery or a holiday at one of your bucket list destinations. Whatever your goal is, make sure you have a plan in mind.
2. Examine the current state of your finances
As we all know, money doesn’t grow on trees.
If you want more savings, put simply, you need to earn more, or spend less, or both. And to make a start on that, you’re going to need to examine your current finances.
If you’re comfortable with technology, ask your bank if they have some free software – like an app or tools included in their internet banking platform – that can analyse your income and expenditure and generate insights on exactly where it’s coming from and going to.
If your bank doesn’t offer that, then there are several personal financial management apps that you can download onto your smart phone and securely connect to your bank account.
If an app is not for you, but you know your way around a computer, download your bank statements for the last year in a computer file format that will let you organise it neatly in a spreadsheet.
You may be quite surprised by what you learn from this analysis!
3. Adopt an optimisation mindset to get the best value when you spend money
Now that you know a lot more about your outgoings, can they be optimised?
Do you have some big-ticket outgoings like insurance? It never hurts to shop around and get competitive quotes, although admittedly it can be a hassle, which is why most of us don’t do it and pay the ‘loyalty tax.’ The savings on car, home, boat or investment property insurances can be huge. Note that you don’t necessarily need to wait until renewal time to switch because, depending on your provider, it may be possible to cancel insurance by giving notice. Check with your insurers.
Are you paying fees on any bank accounts or credit cards? It can’t hurt to call the bank and ask if they have a fee-free option. Or ditch the credit card altogether and use a debit card instead.
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Article courtesy of Startsat60