Top tips for saving money… from people who work in finance
Looking for ways to build your savings without having to give up your daily barista coffee or smashed avo on toast?
Well, we reached out to people who work in finance and asked what the best financial advice they have been given was, and what their hot tip is for saving money... and we can confirm there's no mention of ditching a latte.
Always have a saving goal
It's easier to keep focused if you know what you are working towards. Whether it be a stand-up paddle board, house deposit or that holiday to Fiji, do your research and shop around for the best deals, once you know how much it will cost, set that goal and start saving!
For some people, having their goal put up somewhere can help remind them of what they are working towards, keeping them on track. Got a dream car in mind? Stick a photo on the back of your bedroom door, on the fridge or even use it as your phone background.
If you're saving for the sake of saving, set an ambitious $$ amount. It's best to always have something to work towards to keep you motivated and on top of your finance.
Spend within your means
We know, it's one of the most common pieces of financial advice going around... What does it mean? It means not spending more than you earn and making a budget that is realistic to you, and making sure you stick with it.
While it can be tempting, spending more than you can afford can be risky and there's a higher chance of getting yourself into debt, costing you more in the long run (especially if you have multiple credit card repayments to manage).
It's a great habit to put away a certain % of what you earn before you spend any of your pay. Many have recommended using the 50/30/20 budget method. This means splitting your pay by putting 50% towards your 'needs' (rent, bills, food etc.), 30% towards 'wants' (dining out, clothes etc) and 20% towards your savings. You can read more about this method here.
Occasionally you might find that you have spent your allocated 'want' money between pays, and you think 'it's okay to withdraw a small amount from my savings to get it now', or '*I'll just put it on the credit card and pay it off later'. *
Restrain yourself! Being tempted to dip into your savings or use your credit card may mean you find yourself in a merry-go-round of paying off credit and all of the budget rules you made go out the door, taking you longer to reach your saving goals.
It's also important to make sure you have accounted for any repayments in your next pay (this means less play money but hey you took that risk). If you miss a repayment payment or pay it late it may lead to a default and have a negative impact on your credit score.
Pay yourself too
It's true, you can still have fun! Whilst putting all your money towards your needs and savings can help you reach your goal faster, it can be hard to maintain if you're not enjoying the process. It is totally okay to treat yourself every now and then - you worked hard to earn that money, just make sure you stick within your budgeted fun-money and avoid dipping into those savings.
Include a savings buffer
It's exciting when you finally hit your savings goal, and it can be tempting to spend it all at once. However, one respondent said the best advice they were given was to sit on the amount you have saved up and then save some more for a sufficient buffer.
This might be 10% above your original goal. For example, if your goal is to save $10,000, save an extra $1,000. So, you will have $11,000 before you can spend any of it.
So before you run out to spend your savings on what you have been patiently waiting for, make sure you have that extra 10% left over. You also get to enjoy that awesome feeling of seeing all of those savings in there a little longer.
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