How to save money in Australia: our ultimate guide
Saving money is something that everyone wants to do but can often seem like a daunting task. However, with the right guidance, you can start saving money easily and efficiently. From setting a budget to cutting out unnecessary expenses, there are plenty of ways to start saving for the future.
Living paycheck to paycheck without any savings can leave you vulnerable when unexpected expenses arise. By learning how to save money effectively, you can avoid relying on credit cards, loans, or assistance from others during financial emergencies.
Not only does saving money provide financial security, but it can also reduce stress and improve your overall wellbeing. Take control of your finances today with our guide on saving money!
Whether you’re looking to build up your savings for the future or just want to be more financially secure, this complete guide to saving money will help you navigate the ins and outs of effective budgeting.
What are some budgeting tips for saving money?
If you’re struggling to save money and keep getting caught off guard by unexpected expenses, it’s time to take control of your finances with some budgeting tips.
How to save money tip #1: Create a budget
If you’re looking to save money, one of the first steps you should take is to create a budget. A detailed budget that covers all your income, bills, and expenses for the next 12 months can help you better understand your financial situation. This includes not only your everyday living expenses like groceries and rent, but also your periodic expenses like car registration or holiday costs.
By creating a budget, you can identify areas where you may be overspending and find ways to cut back. This will also help you plan for unexpected expenses and make it easier to save money regularly. While your initial savings may be small, over time they can grow into a fund for emergencies or your financial goals, such as a holiday or home renovations. Creating a budget is a crucial first step in your journey to saving money effectively.
How to save money tip #2: Tried budgeting before and it didn’t work?
If you’ve tried budgeting before and it didn’t work out for you, you may need to reassess your approach. Many people struggle with budgeting because they create short-term or manual budgets that are difficult to manage in the long run. To effectively save money, you need a long-range, detailed, and automated monthly budget that fits your lifestyle and budgeting goals.
Savings plan and debit card management: One key aspect of successful budgeting is integrating your savings plan and managing your debit card expenses efficiently. Tracking your debit card transactions can help you stay within your budget and avoid unnecessary spending.
Credit card debt solutions: If you have credit card debt, incorporating a debt repayment strategy into your budget is crucial. Allocate a portion of your budget to pay off credit card debt faster, reducing interest payments and improving your financial health.
To get started on the right track, consider reaching out for a free, no-obligation appointment. By working with professionals, you can receive personalised guidance on creating a customised budget plan that will set you up for financial success. Don’t give up on budgeting – with the right tools and strategies, you can take control of your finances, manage your debit card expenses, address credit card debt, and start saving money effectively.
How to save money tip #3: Open a dedicated savings account
If you’re serious about saving money, one of the best tips is to open a dedicated savings account. By keeping your savings separate from your everyday expenses, you’ll be less tempted to dip into them. Make sure to choose an account that is not easily accessible, and keep the access card in a secure location.
Savings plan optimisation: Watching your savings grow can be incredibly rewarding. Even if you start with a small balance, over time, those savings will accumulate. Setting up automatic transfers from your checking account to your dedicated savings account can help you stay on track with your savings plan.
Debit and credit card considerations: Managing your debit and credit card usage wisely is essential for maintaining a healthy savings account. Avoid using your credit card for impulsive purchases and focus on paying off any existing credit card debt. Use your debit card for everyday expenses while keeping a close eye on your budget.
Once you have built up a substantial amount, consider transferring it into a term deposit account that offers a higher interest rate. This way, your money will work harder for you and continue to grow over time.
How to save money tip #4: Automate your savings
One important tip for saving money is to automate your savings. This means setting up a system where a portion of your pay is automatically deposited into your dedicated savings account. You can arrange for this with your payroll administrator at work or set up automatic transfers between your accounts.
Managing food and regular expenses: Automating your savings helps you allocate funds for essential expenses such as food and regular bills through direct debit. This ensures that your essential needs are covered while still prioritising your savings.
By separating your savings from your spending money before you even see it, you can avoid the temptation to spend that money impulsively. This strategy takes advantage of the fact that most people tend to adjust their spending habits based on their income level. By automating your savings, you can effectively prioritise saving without having to rely on sheer willpower to resist spending that money. It’s a simple yet effective way to build your savings over time.
How to save money tip #5: The less you spend, the more you can save
The less you spend, the more you can save; it’s a simple concept, but a powerful reminder that saving money is more about your spending habits than your income level. Many people believe that they need a high income to save, but that’s not necessarily true. Even high earners can struggle to save if they are constantly spending on luxury items like big houses, fancy cars, and designer clothes.
For most people, the key to saving money is to focus on reducing unnecessary expenses. By cutting back on non-essential purchases, you can free up more money to put into savings. Remember, every dollar you save is a step closer to achieving your financial goals. So, take a close look at your spending habits and see where you can make adjustments to save more effectively.
How to save money tip #6: Good money habits mean good life choices
When it comes to saving money, it’s important to remember that the ultimate budgeting goal is not just to hoard cash, but to give yourself more opportunities and flexibility in life. Good money habits lead to good life choices, allowing you to craft the kind of lifestyle you desire.
While talking about saving money may not be the most thrilling topic, the end result of financial security and the ability to pursue your dreams is worth it. Money doesn’t buy happiness, but it does provide you with the freedom to make choices that can lead to a more fulfilling and satisfying life. So, embrace good money habits and watch as they empower you to dream bigger and live the life you truly want.
What if my budget is already tight—how can I save money?
If you’re looking to save money on a tight budget, it may seem like a daunting task, but with some strategic planning and self-discipline, it is definitely possible. One of the first steps is to create a budget that will help you track your expenses more efficiently and pinpoint areas where you can trim unnecessary spending.
This will enable you to prioritise your expenses and focus on cutting back in areas that are not essential, ultimately helping you save more money in the long run.
Little expenses can chew into your savings
Make sure your guide to saving money includes “little” expenses. People are often shocked to learn that a large portion of their income is spent on unnecessary, discretionary items that add up to thousands of dollars a year.
Here are some examples of cost reductions that can make a considerable difference over a year:
- Entertainment – cut back $15/week and save $780/year
- Store-bought coffee – cut back $20/week and save $1,040/year
- Alcohol – cut back $30/week and save $1,560/year
- Eating out – cut back $40/week and save $2,080/year
What are some easy ways to cut expenses and save money?
If you’re looking to save money, one of the best ways to do so is by cutting down on your expenses. By reducing your household expenses, you can free up more money to save and reach your money goals faster. Many people are surprised to find that there is actually spare cash hiding in their budget that can be redirected towards savings.
Your expenses can generally be divided into two categories: essential and discretionary. Essential expenses are those necessary for basic costs of living living such as housing, transportation, groceries, utility bills, and medical costs. On the other hand, discretionary expenses are non-essential spending like shopping for new clothes or dining out.
To cut expenses and save money, you can start by reviewing your discretionary spending and finding areas where you can cut back. This could involve eating out less frequently, shopping for clothes only when necessary, or finding more cost-effective ways to entertain yourself. By reducing unnecessary expenses and focusing on saving, you can build up your savings faster and achieve your financial goals more effectively.
However, if you’ve already cut back on your discretionary expenses as far as you can go, there are some changes you can do to save money on your essential expenses:
Refinance your mortgage
How long has it been since you’ve looked at the costs of your mortgage payments? You may not realise it, but if it’s been a while, it’s likely you’re paying more than you should be.
Our team at MyBudget Loans have saved our clients on average $10,000 in repayments per year (*based on data as of January 2024) and you can request a free home loan health check. This is where the big savings can come from!
Consider a temporary boarder
If you have an extra room in your home, one way to save money and even generate extra money is by considering having a temporary boarder. By renting out the spare room to a boarder or temporary tenant, you can reduce your share of household costs and bring in additional funds to help with the largest expenses.
It’s a practical and effective way to make the most of the space you have while saving money at the same time.
Reducing cost of living: Renting out a spare room can significantly reduce your cost of living. The extra income can be used to cover various household expenses, such as utilities, groceries, and maintenance, easing your financial burden.
Supporting your monthly budget: The additional income from a boarder can help support your monthly budget, providing a steady cash flow that can be allocated towards paying off debts, saving for future goals, or covering unexpected expenses.
Maximising household space: It’s a practical and effective way to make the most of the space you have while saving money at the same time. Utilising every part of your home efficiently can lead to significant financial benefits.
Offsetting mortgage payments: The extra funds from renting out a room can also be put towards your mortgage payments, potentially reducing the overall cost and the time it takes to pay off your mortgage.
Managing household expenses: With an additional tenant, you can share household expenses such as internet, cable, and other shared services. This cost-sharing can lead to substantial savings in your monthly budget.
Creating a financial cushion: The extra income can also help build a financial cushion for emergencies or future investments. This financial security can provide peace of mind and stability.
By implementing this strategy, you can effectively manage your cost of living, support your monthly budget, and make better use of your household space. It’s a win-win situation that allows you to save money and generate additional income simultaneously.
Shop around for insurances
If you want to save money, one key step is to shop around for other insurance companies. It’s important to review your insurance costs and insurance premiums annually and consider reaching out to an insurance broker who can assist you with comparing similar coverage and policies. This way, you can ensure that you’re getting the best deal and potentially save money on your insurance costs.
Shop around for utility services
One of the best ways to save money is by shopping around for more efficient utility services. By utilising online utility aggregator services to compare prices, you can ensure that you are getting the best deal on your power bill.
This simple step can help you cut down on your monthly expenses and keep more money in your pocket. Don’t settle for the first offer you come across, take the time to explore your options and find the most cost-effective utility services available.
Take another look at your grocery shopping habits
Taking a closer look at your grocery shopping habits can make a significant impact. Meal planning is a key strategy to cut down on your food and household expenses. Consider shopping online to compare prices and find deals, and plan your meals around discounted items in supermarket catalogues.
Don’t forget to explore your local butchers and greengrocers for special offers and discount deals, as these can help stretch your budget even further. Making small changes to how you approach grocery shopping can lead to big savings in the long run.
Consider alternate methods of transportation
When looking to save money, one effective strategy is to explore different transportation options. Have you considered biking or taking the bus to school or work instead of driving? Carpooling is another great cheaper option to cut down on transportation costs. By opting for alternative methods of public transportation, you can significantly reduce your expenses and save money in the long run.
What is a good emergency savings?
While there isn’t a one-size-fits-all number for how much you should have in your emergency savings, a good guideline is to aim for at least three months’ worth of expenses saved up. This fund can provide a cushion in case of unexpected situations like losing a job.
When it comes to financial safety, having an emergency fund is crucial. It’s important to save consistently, whether it’s finding an extra $100 to save this month or setting aside $2,000 towards your cash safety net for the year.
For those looking to plan for the long term or prepare for major life events, having additional funds set aside can offer extra peace of mind. Whether it’s for taking time off work to care for a loved one or dealing with other life-altering circumstances, having a robust emergency savings fund can provide the financial security needed during challenging times.
Here’s how you save money and create a cash safety net quickly:
- Declutter your home and generate spare cash by selling stuff you no longer need
- Commit your tax return to your savings safety net
- Base this week’s meal plan on food from your freezer and pantry
- Earn extra “pocket money” with a hobby job (eg. lawn mowing, dog walking)
- Take on a second job—it doesn’t have to be forever; just until you create a cash reserve
What are some creative ways to save money?
Sometimes, when your budget doesn’t have much wriggle room, you need to find some creative ways to save money. To be able to put some extra dollars away, we’ve put some tips below.
Make a weekly meal plan
The average Australian household spends around $188 per week a week or $9,776 per year on groceries. If you were to cut your grocery budget by just $10 a week and put that money in a savings account, you would have $520 at the end of the year. Cut $20 a week and you’ll save more than $1000.
The best way to save money on groceries is by meal planning. Simply download our free Healthy meals on a budget guide and follow our 19 yummy and budget-friendly recipes. It includes a two-week meal plan, a complete FODMAP guide, gluten free and vegan swaps and lots of shopping lists and planners. To save even more, create your meal plan around supermarket specials.
Do online grocery shopping
One great way to save money is by doing your grocery shopping online. Supermarkets are designed to make you spend more money on impulse buys, so by avoiding the physical store, you can avoid these temptations altogether. Online grocery shopping allows you to stick to your budget more easily, as you won’t be tempted by snacks and treats strategically placed throughout the store.
Plus, with the added benefit of seeing your cart total in the corner of the screen, you can make sure you’re staying within your budget every time. So, consider the delivery fee as a smart investment in saving money in the long run.
Learn to make espresso coffee
As Aussies, we love our coffee. Three-quarters of us drink coffee every day and 28% have three cups. With the average latte looking to cost you $6, you can see how quickly a coffee addiction can add up. One barista-made daily latte would set you back $2,190 a year. By comparison, stove-top Moka pots make excellent espresso (starting at $10) and Aldi’s $6.99 Lazzio coffee beans, alongside a coffee machine, were rated the best in Australia.
Cancel unused subscription services
One key way to save money is by cancelling any unnecessary streaming services. It’s easy to overlook those small monthly expenses, but they can really add up over time. By cutting just a $10 per month subscription, you could save $120 a year. Take a look at your current subscriptions and consider which ones you can live without in order to boost your savings.
Sell things you don’t need
Your emergency savings fund could be hiding in your cupboards and garage. How? In the form of stuff you don’t need or use. Sell your unwanted items on online marketplaces or Gumtree. Here is an opportunity to declutter your home and boost your savings at the same time. While you’re at it, consider spring-cleaning your finances too.
Stop using your credit card
It’s also difficult to start saving if you’re carrying a credit card balance. Breaking a credit card habit requires taking control of your spending habits, which might mean tightening your belt for a while. But think of how good it will feel to channel the money you were spending on credit card payments into your savings.
How can MyBudget help me to save money?
If you’re looking to get serious about your savings goals and want to implement a strategy to work towards them, then MyBudget can help you on your journey. MyBudget will help you to set up a realistic budget, giving you extra motivation through those bad times while ensuring that your essential expenses are being paid on time.
For a free appointment, give us a call on 1300 300 922 or enquire online.