The sooner you start, the more you can save. The key is to make a savings plan that motivates you.

Set a savings goal: Whether you’re saving for new facilities, a holiday, home renovations, or you just want a little extra in the bank for a rainy day, setting your savings goal will help you get there. The Australian government website, MoneySmart, offers a free savings goal calculator to help you work out how much money you need, and how long it will take to reach your savings goal.

Have a savings plan: The secret to saving is start early and save often. Create a savings plan so you can manage your money and stick to your goal.

Know where your money is going: Have a clear picture of your regular expenses and spending habits. This helps you see where you can cut back and save. For example, cancel an unused gym membership or bring your lunch to work. It may surprise you how little things add up. MoneySmart also provides some useful ways to track your spending for practical ways to get started.

Start a budget: Once you know how you’re spending your money, you can set a realistic budget. Your budget will help you to stay on track, review your progress and reach your money goals sooner. MoneySmart provides some useful advice on how to do a budget to get started.

Pay off some debt: If you have some money left over after your regular expenses, use it to make extra repayments towards any credit card debt or loans you have. Paying off your debts sooner can save you thousands in interest. Pay off the one with the highest interest rate first. You can use the MoneySmart credit card calculator to see how much you can save by making extra repayments.

FIRST: GET RID OF WASTE

Look for ways to reduce your spending: Look at your expenses to see where you can make quick savings. Every little bit will help.

Find quick wins: Look through your bank or credit card statements for the last two months. Identify anything that isn’t essential, or you can defer for a while. This could be things like subscriptions or memberships.

Reduce your grocery and utility bills: Food and utilities are essentials. To reduce your grocery bills:

• Plan meals in advance and only shop for the ingredients in those meals
• Buy home or own brands where you can
• Buy fruit and vegetables that are in season or on sale
• Cook meals like soups and pasta sauces that have lots of left overs you can freeze for later
• Meat can be expensive, so plan some meals that don’t include meat. It would be a healthier and environmentally friendlier option
• Compare energy suppliers to make sure you’re getting the best deal. See Compare and Switch below.

Shop around: If you’re renewing any of your key services, like phone plans, utilities or insurance, shop around and get quotes from more than one supplier. Always check the details in any policies for exclusion, to see what you’re not covered for. You may be able to save on your premium by increasing your excess or advising them of changed circumstances. You can also find out how to get the best price and protection when choosing car insurance or home insurance.

COMPARE AND SWITCH

Always shop around for the best deal

It has never been more important to do your research before you sign up for any service like a mobile phone plan, utilities, or financial product like a credit card or loan.

Comparison websites can be useful, but they are businesses and may make money through promoted links. They also may not cover all your options. MoneySmart offer some excellent free advice on what to keep in mind when using comparison websites.

Make sure the product is right for you and that you’re getting the best deal. For example, choosing a credit card with a lower interest rate and fewer fees can save you a lot.

Similarly, when it’s time to renew your insurance, compare premiums with other providers online. Your current insurer may offer to beat competitors’ offers if you stay. You can also find the best deal on your electricity and gas on the Australian Government’s Energy Made Easy website or Victorian Energy Compare, if you’re in Victoria.

WAYS TO SAVE

Set up a separate savings account: An online savings account is a great way to manage your money. Unlike a transaction account, you can’t spend money directly from a savings account, so it’s harder to dip into your savings. Look for an account with the highest interest rate and no fees, to grow your savings faster.

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Automate your savings: Transfer part of your pay into your savings account. You can ask your employer to do this for you or you can set up a regular transfer via your Internet Banking. This way, you’re saving without even having to think about it.

Round-up transactions: Some savings accounts let you round-up your daily transactions to the nearest $1 or $5. The change then goes directly into your savings account. For example, James buys a coffee before work each morning:

• The coffee costs $4.20.
• His account is debited $5.
• 80 cents goes straight into his online savings account.

After a year, James will save more than $200.

Change a spending habit and save: Change one regular spending habit and save. Small spending changes add up to big savings in the long run.

• Switching from a large to a small latte can save $1.50 a day. This saves more than $500 a year on buying coffee.
• Cut down on alcohol – it will save you money and can have health benefits.
• Make your lunch at home. Saving even $5 a day on buying lunch adds up to $1,200 over a year.
• Cut back on eating out or ordering in. Australians spend 34% of their food budget eating out on average – or $1,600 a year.

As always, it is important to seek independent advice regarding your specific situation. This content should be regarded as general information.

The sooner you start, the more you can save. The key is to make a savings plan that motivates you.

Up to date as of 31 Jan 2021.