Saving money for the things that matter

SavingForThingsThatMatter

In life, there’s the money you have for right now and the money you have for the future – the important things such as getaways and your retirement.

But saving money for the future can often feel like an overwhelming feat. With home electricity bills, transport costs and having money for the unforeseen expenditures (as well as the occasional ‘for you’ costs), you can be forgiven for feeling as though you have no money to spare.

The good news is there are ways you can reduce costs and find additional savings to invest for the future (or for your next trip), and most of them are relatively simple. Read on to find out just how you can go about this.

 

What do you not need?

Often it can be the small treats we purchase from week to week that can actually cause a notable dent in our overall finances. For you, such treats could be anything from a meal at McDonald’s each weekend to a bag of chips. Let’s say, for argument’s sake, you do buy a McDonald’s meal every Sunday and it costs you $10 each time. And given there are approximately 52 weeks to a year, we can safely assess there are 52 Sundays. In total, you end up spending $520 each year on McDonald’s. Over four years, more than $2,000 has gone into your favourite meal (provided prices don’t increase over that four year period, of course).

Thing is, even if you were to simply reduce your McDonald’s outings to once a fortnight, you would effectively save $260 a year. Over four years, that would be an additional $1,040 to add to your savings. And this is just one treat. If you happen to treat yourself several times a week or your treat purchases are in excess of $10 (which, realistically, likely are), then you could be saving massive amounts of money just by being a little more strict on your non-essential purchases.

You don’t have to sacrifice treating yourself from time to time, but you can certainly take steps to reduce the amount of money you spend on them. And if you don’t want to give up your weekly treat ritual, then you could simply see if you can change the nature of the treat to make it cheaper (e.g. a couple of small burgers from McDonald’s for $5 instead).

 

Cut back on your electricity usage

The thing is, electricity is vital to modern day life, so you can’t exactly do away with it. But what you can do it find ways to cut back on your usage. And this doesn’t just apply to your home’s electricity, but to your car’s petrol, water use, and so on.

Often we can mindlessly keep our lights, fans, TVs, computers, air conditioning and a whole host of other appliances on when they don’t actually need to be. We’re all guilty of walking out of a room and forgetting to turn the light off, and that forgetfulness, in turn, attributes to our overall power bill. By being more vigilant and ensuring things aren’t turned on and/or running when they don’t need to be, that can reflect positively on your next electricity bill. And whatever you don’t have to pay on that bill compared to the average you’ve been paying, that additional amount can be put into an account or invested.

Similarly, if you can reduce how often you drive or prevent your taps from dripping water, these are also additional savings. Note how much you usually pay for petrol each week and place any savings into an account or invest it.

 

Invest

Of course, a common means of being able to save and build your finances is through investment. Now, investment doesn’t have to exist in the capacity of investment properties or entering into the stockmarket. Investment can apply to a whole range of things, including bank accounts.

As we mentioned in a previous article, several banks here in Australia offer a number of investment-focused bank accounts. You can essentially put in money instalments throughout the course of a month and then receive a certain amount of interest at the end of each. Different banks to do this differently. For example, many of the Commonwealth Bank’s investment accounts work by calculating the interest daily and then depositing it monthly. So the earlier in each month that you put in an instalment of money, the better it is for you.

Ultimately, what you want to invest in is completely dependent on what approach you prefer. Just be mindful that investments such as properties and the stock market have inherent risks, such as a decrease in property value or a stock market crash. The Global Financial Crisis is a shining example of such risks. But ultimately, investment is worth considering, whether you opt for traditional investment options or simply invest in a interest-driven bank account that rewards you for regular money instalments.

Looking for advice on how to save money and increase your financial standing? Give Straight Money Talk a call on 1300 416 590.


Copyright © 2014 Robert Bauman. Feel free to use this article in your hard copy or eNewsletter, provided you display the Copyright notice and source reference in its current form.

Disclaimer: This information (including taxation) is general in nature and is for Australian residents only. It does not consider your individual circumstances or needs. Do not act until you seek professional advice and consider a Product Disclosure Statement. To find out more about services provided by Straight Money Talk Pty Ltd please visit my website.

Robert Bauman is a Director of Straight Money Talk Pty Ltd, ABN 63 082 454 730, ASIC Authorised Representative No. 40644. Straight Money Talk Pty Ltd atf SMT Trust is a Corporate Authorised Representative of Millennium3 Financial Services Pty Ltd, ABN 61 094 529 987, an Australian Financial Services Licensee number 244252.

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