7 tips for saving.
We all want to save money, so we can be financially fit. But wanting to save and actually saving are two different things entirely. Here’s some tips to help make you financially fit in no time.
Just like working out, getting financially fit is a discipline that will get easier every day. Being focused on what you want to achieve and having the right mindset will help you reach your future financial goals, sooner.
We all want to save money, so we can be financially fit. But wanting to save and actually saving are two different things entirely. Here’s some tips to help make you financially fit in no time: things like paying yourself first, setting savings goals, and setting up a savings account with a regular automatic deposit. Which is kind of like putting your savings on autopilot. You just sit back and enjoy the ride while you save.
Just like working out, getting financially fit is a discipline that will get easier every day. Being focused on what you want to achieve and having the right mindset will help you reach your future financial goals, sooner Just like spending (which is way too easy to do), there are some good habits we can adopt that will help us save more effectively. The more you save, the stronger position you’ll be in.
A really good habit to get into is to allocate savings as part of your budget before you set aside your spending money. We like to think of it as paying yourself first or putting your financial future first. No matter how you look at it, it’s all good. The trick is to start saving money now, so you can reach the financial future you want even sooner.
So, how much should you pay yourself? Great question. A good place to aim is around 10% of your total income. It may not always be possible, but the point is even if you start small, you should start now! Because even small amounts add up big time for you over time. And once you get into the habit of saving, it becomes less noticeable to the point where you don’t even miss it.
Another simple trick to save is to set up specific saving goals for yourself. Say you’re saving up for the latest tech gadget, setting off on a long-awaited holiday or maybe you’re even thinking about a home deposit… by having a specific target in mind and setting yourself some simple but manageable steps to get there, you’ll give yourself the best chance of reaching those goals.
So, start with a challenging goal for yourself but one you can manage, too. It’s important that you don’t make your savings goals too difficult. For instance, if you say you want to save $100 a week but then find that you have to keep dipping into your savings for “everyday spending”, you’re not going be very happy with the result… or with yourself, for that matter. It may take a little time to get it right. But you’ll start to build up to higher savings targets over time and eventually land at
your savings happy place. Now, how do you set your savings goals? When you’re doing this, it’s best to think about setting your priorities into three levels or “savings buckets” for short, medium and long-term goals. Firstly – there are short term savings that help with things like medical expenses or car repairs. You might like to think of this as your emergency money, too. This “bucket” should be quite liquid, meaning you should have no trouble withdrawing the money when you need it.
Secondly - there are medium term savings. These savings are for 3-5 year goals, such as saving for an overseas holiday, a car, or even a house deposit. These things aren’t hard to save for, but as things get more expensive over time, it becomes harder to keep your financial fitness in perspective. The good thing is, you generally won’t need quick access to this money, so you can afford to lock the money away, say in a term deposit, potentially earning you more interest.
Finally - there are long term savings, such as saving for retirement. This is the big bucket. These savings will often be in the form of investments - things like superannuation, shares, or purchasing investment properties. Accessing this money is generally more difficult as it’s all tied up in your investment. However, that’s still okay because you generally won’t need to access it quickly. That’s what your short-term savings bucket is for.
By allocating your savings into these three buckets: short, medium, or long-term goals, you’ll effectively be covering all bases for the future.
Financial fitness is all about being smart and making SMART financial goals – and by that we mean Specific, Measurable, Achievable, Relevant, and Time-bound. Along the lines of … I want to save $2,000 at the rate of $100 a week to purchase a new bike so I can get fitter in 6 months-time. That will get you fiscally and physically fit!
Looking for smart ways to fill those savings buckets faster? You could start by looking at your lifestyle and how you currently spend money. Is there any discretionary spending that you can reduce? Do you really need 7 coffees a week? Have you got the best deal on utilities? Insurance? Think about how you could reduce those costs. You’ll be surprised at how much you can save when you start looking.
Having the financial future you want, is too important to let it go to chance, so it’s essential to have a plan for your money. By putting together a comprehensive (and doable) budget for yourself and understanding what money gets spent where, you put yourself in the position of control. That way you can choose how you want to spend your money and exactly how much you can save.
It’s also a good idea to keep your savings separate from your regular spending money. If it’s tucked away, out of reach you’ll be less tempted to use it… and you may also be able to make it work harder for you by keeping it in an account that pays interest, potentially earning you even more money. You’ll see your savings grow over time … giving you options and choices in the future.
And finally, saving is about creating the financial future that you want but it shouldn’t mean that the present is all hard work … set yourself some regular milestones that you can reward yourself for to remind you why you’re saving in the first place.
So there’s our 7 tips for saving. Pay yourself first, aim for 10%, set SMART saving goals, assess your lifestyle and spending habits, have a plan for your money, keep your savings separate, and celebrate milestones.
The best way to get some early runs on the board and save is to set up a direct deposit from your pay straight into your savings account. Automatic deposit equals automatic savings, after all! That way, your money is out of sight and out of mind, and in time you won’t even miss it. That’s the beauty of financial fitness. Try it and you’ll see that a little bit of discipline will help your savings account grow stronger and your money go further.