Updated: Dec 11, 2019
In the face of rising living costs, high levels of debt and mortgage stress, many Australians are finding it difficult to save money. But even on an average income, with a little patience and perseverance, it is possible. Wondering where to start? Here are some small changes you can make that can save you over $16,000 a year:
Review your debts: to ensure they’re structured efficiently to minimise the interest
Speak to your bank or a mortgage broker and ask what’s possible. If you have a home loan of $500,000 at an interest rate of 4.5 per cent, you’ll pay $412,034 in interest over 30 years.
Reduce the interest rate by 0.25 per cent and you’ll save $26,452 over the life of the loan.
Review it all: insurances, utility bills, subscriptions and memberships
Cancel any non-essential services you’re not using. Work out how much the others are costing you and ring the providers. Let them know you’re looking for a better deal and ask what they can do for you.
You’ll be surprised how quickly they respond once they know you’re considering jumping ship.
Pay it Early: Pay your bills during the discount period
Many bills, such as council rates and car registration, offer a discount for early payment. You could save heaps on rates and rego if you pay within the discount period.
Pay it off: Pay personal debts as quickly as possible to minimise interest
Pay off the debt with the highest interest rate first, then channel those repayments into the next one. Is the interest rate for your car loan higher than your home loan rate? Focus on paying the car loan as quickly as possible and you could save thousands in interest. Check with your loan provider, though, to make sure there is no penalty for early repayment.
Review: Review your mobile phone plan
Do you really need the $200 per month plan that seemed suitable when you signed up for it? Perhaps the $80 plan would suit just as well. It takes time to sort out, but it could save you massively. Well worth a look.
Be Disciplined: Don’t fall into the credit card points trap
Points are not free. In fact, many rewards programs are aimed at making you spend more than necessary. Rewards credit cards usually have higher interest rates and annual fees, too. Consider switching to a lower rate card with no annual fee and you could save a significant sum every year.
Shop Year Round: Purchase Christmas and birthday gifts during the year
They’ll be on sale and you can put them aside for later. Buy when stores are offering bargains and you will easily save a fortune.
Smart Shop: Buy clothes in the season changeover period when most stores offer sale prices.
Consider buying that beautiful winter coat at the end of winter or picking up a new swimsuit when the weather is cooling down. You could save a lot of money here.
Don’t Do It: Don’t smoke.
It’s an expensive habit which also increases your personal risk insurance premiums. With the thousands you’ll save not buying cigarettes, you could go on a great holiday.
You’ll also reduce the cost of income protection, life insurance, and total and permanent disability cover. This could save you hundreds if not more than a thousand dollars in premiums each year.
Buy Online: Purchase cosmetics and skin care products online
Many websites offer significant savings with prices often around 20% cheaper than retail stores, even for big name brands. By doing this, you could save a packet.
Stop: Don’t grocery shop when you’re hungry!
You’re much more likely to make impulse purchases on an empty stomach, costing an extra $20 each time. Do this once a week and that’s $1,000 a year.
Bulk it: Buy commonly used items in bulk
For example, you might drink Coke every day. If I bought it at the shop, it would be around $3 a day. Instead, I buy a carton and pop them in the fridge at work and home and pay 60 cents per can.
Cancel: Cancel apps you no longer use
With most subscription-based apps costing a few bucks a month, it adds up. Cancelling a handful of unused apps could save you a lot per year.
Bring: leftovers instead of buying lunch.
Although everyone enjoys catching up with friends over lunch, bringing your own lunch just twice a week could save you lots.
Super: Salary sacrifice into your superannuation
Okay, no one likes talking about superannuation but stick with us. If you take just $20 a week from your pre-salary and put it into your superannuation, that’s $1,040 and a tax saving. Do this every year until retirement and you will be looking at a much larger retirement nest egg.
Saving money doesn’t have to be hard. You just need to start somewhere.
You’ll be amazed at how much you can save by making a few simple changes – so get to it.
Your Choice Mortgage Brokers Pty Ltd atf Halo Innovation Trust trading as Heart Mortgage Services - Australian Credit Licence 38643
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