It’s hard to find someone who doesn’t agree with having a few dollars stashed away. While watching your account grow is rewarding, it’s also extremely difficult to save money at the moment.
The cost of living is increasing at a level not seen in 20 years that wage growth isn’t keeping up with, add to that other psychological pressures to spend and you’ve got an environment that makes it near impossible to save.
Luckily, there are strategies available to help you put some money into your piggy bank, there’s even a round up savings app in Australia and other automations that can put your money savings on autopilot.
So, why’s it so hard?
It’s easier than ever to spend money now, back in the day we had cash and physically handing over the notes and coins had a psychological effect on you, it’s a thing you could physically see leaving your possession.
Now with contactless payment technology, Apple and Google Pay, and the ease of which you can enter payment details online, spending money is easier than making it as there is no tangible feeling of loss, spending $2 or $2,000 is exactly the same card tap.
The stuff you buy is more expensive now too, Australia’s inflation rate is 5.1% over just the last year, meaning things are 5.1% more expensive than they were a year ago. That might not seem like much, but remember the target for inflation is between 1-2% normally, so over the year it was more than double that.
Wage growth isn’t keeping up as the latest results show that the annual wage growth was 2.3% in Australia, so your pay stub is worth 2.8% less than it was a year ago, that’s over $2,500 a year on an average salary.
The rate your bank gives you for savings is also abysmal, with the best maximum rate only yielding less than 2% a year meaning that inflation will eat your hard earned savings.
Strategies on how to save
The first most important thing to do is set a budget, budgeting will show you where your money is being spent and more importantly how much you are able to save without dipping back into your savings every week. A savings goal along with the budget will assist in showing how long and how much per week you’d need to save in order to reach your money goals.
Put your savings on autopilot, once you know how much you can save, set up an automatic transfer to 3 places: your savings, your “must have” spending like money for groceries/fuel, and your money you can splurge on whatever you want.
Use a separate bank for your savings account which doesn’t have a debit card, so you’re not tempted to spend it. Alternatively, set up a recurring payment onto an app which invests your money, so you get the most returns.
Having a totally separate debit card and account for your spending is a great way to manage your splurge purchases, you can even set up your phone so you can view how much is left in this account on your home screen. Link this account to an app which rounds up your purchases and invests them and you’ll be putting away more money in no time.
Ask for a raise at your job, you’ll be surprised how little people actually ask for more money due to being scared, but the answer can’t be worse than no. If the job market is good in your area, consider moving companies. Sometimes, moving to a new company for the same job can increase your salary by 15% – 20%!
This last one might seem obvious, but decrease your spending where you can, don’t live on rice and beans, but consider what you really need to be buying and where you can make some changes such as switching to the “store brand” goods. If you have the space and know what you eat or use a lot, you could buy in bulk to save money too.