Top ways to cut your expenses and increase your savings
Can saving your home deposit be as easy as taking a cut lunch to work every day? Well it isn’t that simple, but cutting spending does make it easier to start building your nest egg.
As well as having a budget, savings plan and investment strategies like placing funds in a high yield savings account, reducing and eliminating expenses is a good way to add to your savings balance.
To do this successfully, you need to follow four key steps. These are -:
1.Understand your spending
Keeping track of where all your money goes is difficult considering how easy technology makes it for you to spend with cashless payments and credit cards.
You can get a good grasp of what you’re spending and where by taking advantage of the online tools made available by various online banking systems. Alternatively you can make use of an App that helps you to track personal expenses. ASIC’s TrackMySPEND is a popular choice.
2.Identify potential savings in the essential items
While some living costs are absolutely necessary, there may be some wriggle room to reduce those costs, particularly in the short to medium term. Some examples to think about could include:
- Reduce housing costs by choosing a cheaper rental alternative or moving back in with your parents for a short while. The short term inconvenience could pay dividends pretty quickly.
- Use proven budgetary tactics like making shopping lists, planning meals and bulk buying. Make take away meals and eating out a treat rather than the norm and budget accordingly. .
- Look to reduce regular bills by shopping and comparing. Savings can be made simply by letting current providers know that you’re shopping around.
- Cut down on using the car by taking public transport; carpooling, riding a bike or walking. Not filling your tank as often translates into money in your bank account.
- Wherever possible pay the full balance off credit card and other account debts. Monthly interest bills are a drain on your savings potential.
Cut down overspending
Most of us overspend on something that gives us pleasure. It could be on a particular hobby, going out to certain places or simply buying a heap of clothes. While no one expects you to live like a hermit, we can enjoy our favourite things without going overboard. Set a realistic budget to reduce your spending in this area and as you begin to experience success, consider tightening the belt a little further.
Two critical periods where Australians tend to overspend are the Chrustmas and holiday periods.
In both instances, it is very easy to get carried away and overspend. The key is to be aware of the potential pitfalls and to plan and budget accordingly.
Eliminate Unnecessary Costs
Invariably there may be costs that creep in and become unnecessary. There may be services that were once worthwhile but have now become superfluous. Cancel them. Review internet and mobile plans – and identify if you’re paying for excess data. Is that gym membership still a must have? Do you still read that magazine you subscribe to?
It all adds up. Every dollar you save can be a dollar that gets you closer to home ownership