Ask The Wealth Guy Budgeting

10 Ways to Save Money

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We all struggle at times to save as much as we should. The problem arises when your overspending becomes a habit and you forget how to save money.

Here are 10 ways to save money that you can start doing today.

1.Budget, budget, budget.

Many people are surprised at just how much they’ve been spending on certain things when they actually write it all down. It just goes to show, without a budget it’s impossible to gain a true understanding of exactly where your money is going, and where you need to cut back.

Aim to allocate 20% of your income to savings, 30% to wants, and 50% to needs. Use our budget calculator HERE

2.Stop using a credit card.

Using a credit card to make a purchase just feels so much easier than paying cash – after all, at the end of the day, your bank balance hasn’t decreased! But don’t let this make you more willing to spend more than you would have if you were paying with cash. Stop and consider whether you can actually afford it.

Australia’s current credit card debt is over $33 billion. That’s an average of $4,251 per credit card holder, equating to $765 in interest annually. Make it a priority to clear your debts. Consider consolidating them into a personal loan for a lower interest rate and a more structured way to pay back what you owe.

3.Use your own bank’s ATM

Australian banks make over $500 million in profits from ATM service fees every year – service fees that could be avoided simply by using your own bank’s ATM and planning ahead to avoid excess transactions.

Even two transactions per week from a foreign ATM equates to over $200 per year of totally unnecessary expenditure.

4.Use regular unleaded fuel

Petrol companies’ profit margin for premium fuel is over twice as much as for unleaded fuel (3.69 c/L vs 1.77 c/L). What this means is that the value of premium fuel is not proportionate to its higher price.

Indeed, independent research by NRMA found that the benefit of using premium fuel is minimal, and that it is not worthwhile unless the vehicle manufacturer specifically states that you must use it.

5.Stop impulse buying.

When you see something you want, don’t just buy it. See whether you can find it (or an equivalent) elsewhere at a better price. Look in thrift stores, garage sales, eBay, Gumtree, or other online stores. And be patient – if you can’t find it at a good price, wait for a sale, or reconsider whether you truly need it.

Set yourself a challenge to try to reduce how much you buy – assign a day a week to ‘buy nothing’, or try to go a month without buying anything other than the absolute essentials.

6.Plan your lunches

Bought lunches cost as much as $50 per week, or $2500 per year. You could be saving at least half of this by taking your lunch to work. It’s easy once you get into a routine.

Make enough dinner to leave leftovers for lunches, or get up 10 minutes earlier and make your lunch for the day. If you simply can’t go without buying lunches, reserve it for a certain day of the week – you’ll appreciate it far more.

7.Don’t buy something just because it is tax deductible

People often seem to buy things that are tax deductible as if they are free. This is so far from the truth! Tax deductions do not return the entire cost of the item – only the amount you would have paid in tax on that cost.

For example, if you earn $75,000 per year, you are paying 23% tax. This means that every $1000 spent on tax deductible items, you get a $230 saving, but pay $770 out of pocket.

8.Stop wasting food

According to OzHarvest, Australians throw away over $7.8 billion worth of food every year. This equates to over $1000 per year for the average household, the bulk of which is fresh food and takeaway food.

Minimise wastage by:

  • Planning meals around what you’ve already got in the fridge
  • Planning the week’s dinners in advance and buying only as much as you need
  • Planning meals with the same perishable ingredients so that none gets wasted
  • Using leftovers for lunch
  • Freezing anything you can that you know you won’t use in the near future.

9.Know your benefits and entitlements

Many of us mistakenly believe that we are saving money by completing our own tax rather than paying for an accountant to do it. This is rarely the case, as accountants can usually find extra claims you could be making that more than offset the cost of their services.

Private health insurance is another area where many people are missing out. Call your insurer to double check what you are entitled to claim, and make sure you’re taking advantage.

10.Review your mortgage

Regularly review your mortgage terms, particularly your interest rates, and see whether you could save money by refinancing.

Though you may not have to: if you let your lender know you have seen better deals elsewhere, they may be willing to decrease your rate to retain you as a customer. Another great way to save money is with an offset account, which allows you to use every cent of your savings to reduce the effective balance of your loan, and thereby reduce your interest.

What are some of the ways you use to save money?

The Wealth Guy Signature

 

Joshua Stega

The Wealth Guy

Joshua Stega is an expert financial adviser and founder of JAS Wealth in Sydney. He specialises in the habits and behaviours of wealth. Joshua has a Masters in Taxation and Financial Planning and is regularly featured in the media

M.TaxFP, LLB(Hons), B.Bus(Acc), FTI, Adv.DipFP, Dip.FP, SMSF Specialist
The information on this blog and website is of a general nature only. It does not take into account your individual financial situation, objectives or needs. You should consider your own financial position and requirements before making a decision. We recommend you consult a licensed financial adviser in order to assist you.
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