There are some simple ways to help manage your money that can make a big difference in achieving your savings goals. From budgeting to investing in your super, here are our tips for getting on top of your finances.
Track your spending
Managing and saving money works best when you have a clear picture of what’s coming in and going out. You could start by recording what you earn and what you spend. Quite often, we don’t have an accurate view of what we’re spending, and once we take a closer look, we realise how quickly all those little purchases begin to add up. There are apps such as Frollo or WeMoney that can help you do this by entering your expenses or scanning receipts.
There are ways to balance your spending with your saving to ensure you can continue to indulge in purchases from time to time. Consider hidden costs, like subscription charges, that add up over time. Review what you are signed up for and ask yourself, ‘Am I getting value for my money?’ and ‘Am I using it enough to justify the cost?’. It’s easy for free trials to run over, so cancelling memberships is one way to help keep money in your account. The convenience of technology has made spending money much easier, so it’s important to keep an eye on those online purchases or buy now, pay later services.
Set a budget
It feels good to be in control of your money, and setting a budget is a great place to start. When creating a budget, you’ll need to balance your immediate needs with your medium and long-term goals. To help you set up your budget, a great place to start is the moneysmart budget planner. You can download and use this free tool across all your devices to understand your current spending habits and begin saving for those things you really want.
You can then commit to a savings target and monitor that over the weeks and months. For example, on the first of the month, your account balance might be $5,000; you might decide that it should be $6,000 by the end of the month. You might want to set up automated payments to a separate savings account so you don’t even notice the money leaving your transaction account, which will mean you have less to spend. You could create multiple savings accounts for different medium or long-term goals so you can easily track your progress.
Make the most of your money
How you choose to make the most of your savings depends on your goals. There are several different ways to maximise your money and make sure your savings are working for you.
You could keep your money in a bank account where it might earn some interest, or a mortgage offset account where it could help you pay your home loan off faster. To help you with medium to long-term goals, you might consider a term deposit or an investment such as shares, bonds, or property.
Another consideration is how you want to boost your savings for later in life. One day, you’ll want to stop working, and when you do, you’ll need enough money to live comfortably. Although it might seem like a while away, getting a head start by engaging with your super now could help set you up for a better retirement. Getting financial advice could be a good way to decide which option suits your circumstances.
How super can help
Super plays an important role in funding your future. When you enter the workforce and if you’re eligible, your employer puts a percentage of your income into a super account (known as the superannuation guarantee or SG). The SG rate will rise from 11% to 11.5% on 1 July 2024 and then will increase again to 12% from 1 July 2025.
Your SG contributions are a great way to start, but for many the SG alone may not provide them with enough for a comfortable retirement. Making personal contributions to your super when you have some extra cash on hand means you could have more savings to retire with – and depending on how you decide to add extra money to your superannuation, you may even be able to save on the amount of tax you pay. Even small amounts may make a big difference, because of the power of compound interest.
Compounding is one of the keys to successful saving – it’s returns on returns, or earnings on earnings. And because you can’t generally draw on your super until preservation age, your savings benefit from many years of the compounding effect on your investment returns.
Consider your advice options
Being able to ask questions and get expert recommendations can make all the difference. Everyone’s financial journey is unique, so it’s important to get financial advice that’s right for you. From simple super advice over the phone to comprehensive financial advice tailored to your objectives and financial situation, there’s a range of options – and there’s usually no extra charge for simple advice on a single topic.
