We know that saving money isn’t always easy, whether it’s for a holiday, a new car or for one of life’s biggest and most exciting purchases – your first home.
So, here are some tips and ideas on how to save simply and smartly, so you’ll be seeing your bank balance grow.
Know the ins and outs
Draw up a budget setting out your income and expenses. From there, you can also allocate yourself an amount for spending and an amount for saving. It takes a bit of discipline to work to a budget, but the results you’ll achieve from living this method are worth it.
Pay down your loans
One of the biggest sources of ‘bleeding money’ is the interest we build on our loans. For every dollar you’ve borrowed from the bank – whether as a personal or car loan, credit card or business loan – you’ll be paying interest, which is money in their pocket, not yours!
Biggest isn’t always best
Small amounts of regular savings can lead to an impressive total over time and will demonstrate your consistent saving to a lender. Set yourself a weekly goal that you know you can stick to. Skip the food hall and bring your own lunch to work four out of five days a week. Not only will you reap the benefits for your own health, but you can easily save $20 a week, which totals over $1000 in a year.
Choose the right place to keep your savings
If, like many people, you see a high number in your bank account and are tempted to spend, consider a term deposit. You can lock your money away in a higher interest account for a fixed period of time, so it can’t be immediately accessed – which is great for avoiding those “want but don’t need” purchases!
Remember your goal
Put up images that inspire you to keep your saving motivation. An image of your dream home, or the furniture you want to include. Pictures of you and your friends enjoying a BBQ in your brand new alfresco, or snuggling up on the sofa in your open plan living. Being a Masterchef in your own gourmet kitchen! Whatever keeps you focused on your savings goal.
Make the most of your interest free period
Failing getting rid of the dreaded credit card, try to pay your card off before the interest free period ends. Let the banks lend you money for nothing – which they do for up to 55 days. Interest rate charges accumulate quickly. By the same token, so long as you’re paying it off each month, put as much as you can on the credit card to qualify for loyalty points that can save you money. (Don’t do this if it makes you spend more easily!)
Make a lifestyle change
Find something to give up! If you smoke, cut down or give up completely. If you go out twice a week, go out once a week. Plan to save small amounts of money on a regular basis.
Save money in market assets
Savings in non-market assets are no good either. So, money stashed under the bed, or invested in cars or consumer goods is seen by lenders as spending, not saving. Even if you could sell that vintage bottle of wine for more than you bought it!
Repayment of existing debts isn’t classified as savings
Banks and lenders will normally reject the repayment of an existing debt as genuine savings – even though an economist would officially call this savings.
For more information on low deposit home loans, creating a savings plan or to talk through your options for home ownership, please feel free to talk to one of our Mortgage Brokers today.
