Putting a little money away for a rainy day isn’t always easy. You may have some good intentions, but at the end of the day, there just isn’t any money left. Somehow whatever you make is spent before you make it to the next payday.
In the article "Why You Need To Keep A Household Budget", we looked at the importance of creating and maintaining a budget and how that ties in with your savings.
So to really get into the habit of a great savings plan, start by creating your personal budget. First, take a look at what you bring in each month. Next, write down your fixed expenses. These are things like rent, car payments, utilities etc. Figure out how much you need each month for groceries and other essentials. (If you need some help with figuring out what all your expense may be, check out the Budget Planner at www.moneysmart.gov.au)
Now you have your bare bones budget! This lays out what you need to get by each month!
Next, it’s time for a little bit of math. (Don’t like maths? If you are using the Budget Planner, it will do it all for you!) Start with what you bring in each month, then subtract all your core expenses. What you’re left with is your discretional income. This will pay for entertainment, clothes, getting your nails done etc. From here on out, part of that discretional income will go into a savings account!
Pick a number you’re comfortable with. Maybe that’s just $20 per month, maybe it’s $500. Put it in your budget and treat it like any other bill. It won’t take you long to get into the habit of setting aside that money for savings.
To make it even more hands-off, look at setting up a separate savings account so you can set up an auto-deposit each pay. If you don’t see it, you’ll never miss it and your savings will run on autopilot. Ideally, your savings account is one that doesn’t make it too easy to dip into! Maybe an account with a totally different bank to the one your pay goes into!
Don’t forget to audit your savings from time to time. Take another look at your budget. Can you increase your savings a little more? Another great way to boost that savings account is to take any extra money – thinks like birthday cash, tax return, bonuses etc. – and put them straight into the savings account. Again, you won’t even miss the money, but it will help you build up your savings quickly.
Make sure your savings are sitting in an interest-bearing account. Since you won’t be touching this money unless it’s a dire emergency, you should be able to earn at least a little interest. Compare accounts before you sign up and look at ones that have no fees and pay a higher interest, then you’re well on your way to putting your savings on autopilot!
One last tip....
Have a look at the option of salary sacrifice contributions to your super as a way of boosting your retirement savings!
Need more specific advice regarding your individual needs? Have a chat to Shylea to make sure you are making the most of your money.