Easy monthly habit to save an extra $8,364 a year: 'Get ahead'

Yahoo

2 days ago

Most people think that to save more money you need to cut back harder - pinching pennies, cancelling subscriptions, and guilt tripping yourself out of your next holiday. But the truth is, you don't need to sacrifice more to save more - you just need to be smarter.
The data shows that the top Aussie savers have a household saving rate of 12 per cent, which compares to the average household saving just 3.8 per cent of income. Based on the average Aussie income of $102,000, this means the difference between saving $3,876 vs $12,240, or $8,364 every single year.
Saving money is about optimisation, not deprivation. And if you want to get ahead with your money without giving up on your lifestyle, there are smarter levers to pull. I've outlined the top ways you can increase your savings without giving up the things you really enjoy.
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The simplest, and one of the most effective ways to save more money is to flip your saving and spending. When most people get paid, they pay their bills and do their spending first - with the aim of saving what's leftover - but it hardly ever works out this way.
Instead, make your saving the first thing that happens when you get paid, and spend what's left. This way your saving happens before you get a chance to spend it, and you'll save more. This is the highest ROI move you can make with your money management.
If you don't have a solid system for how you manage your spending and saving, it's easy to get caught up in the juggle. Money moving around to different accounts, paying bills, clearing the credit card, money in different accounts and even with different banks.
If your money is in a bit of a mess, it's easy to lose track throughout your pay cycle - and this makes it harder to get the results you're looking for. Instead, if you have different bank accounts for different buckets of money; bills paid from one account, your general spending in another, a holiday fund set up, and separate savings account - you can automate your money management and ensure you have the right money, in the right places, at the right time.
The biggest expense for most households is your mortgage or rent, so if you want maximum bang for buck with reviewing spending, look here first. Saving just 0.5 per cent on the average Australian mortgage of $665,978 will give you a saving of $277 per month, and finding even a slightly cheaper rental will also make a big difference to how much you can save.
There's a limit to how much you can reduce your spending, but there's no limit to how much you can increase your income. And increasing your income allows you to save more directly without having to sacrifice a single thing.
You can do something as simple as asking for a pay rise, work towards getting a promotion, or failing that, consider changing roles or industries, pick up a side hustle or second casual jobs for a short-term income boost. The statistics show that changing jobs results in an average pay increase of 9 per cent, which based on the average Australian income of $102,000, means an extra $9,180 pay bump - and this money can go straight to your savings bottom line.
Every dollar of tax you save is an extra dollar you can save, invest, or spend today. And the best part is that saving tax doesn't require you to work any harder or sacrifice anything - it's simply about being smarter with the rules and using them to your advantage.
Most people pay more tax than they have to simply because they don't know what they can claim, and they don't keep good records - being on top of this will make a meaningful difference when it comes time to do your tax return. Further, you should consider strategies like deductible super contributions, negative gearing, debt recycling, or tax-effective investing to reduce your tax bill even more.
You probably have money leaking out of your income without you even noticing. Unused subscriptions, bank fees, and utilities where you haven't reviewed the pricing in years - even small savings here when bundled together will add up quickly.
Another opportunity to drive some easy cash savings is through the unused things you have around your home. Research shows that the average household has $5,300 of unused stuff just lying around the house. It takes a small amount of work, but selling off things you no longer need on a marketplace will give you an immediate savings boost.
Saving money is a good start, but it's also something that will never help you truly get ahead - to make real progress you need to put your money to work. Whether it's investing in shares or ETFs, building your super, or paying down your mortgage, you want to get your savings working harder.
For example, saving just $20 daily and investing it into the sharemarket will see the money grow to around $658,000 based only on the long term sharemarket return of 9.8 per cent. This is the power of compound interest, and why it's so important once you're saving to get that money working for you.
Saving doesn't have to mean doing less of the things you love, it just means doing more of what works. Be smart with your system, boost your income, be smarter with tax, and put your money to work.
When you get this right, you make more progress without compromising on your lifestyle and level up your future.
Ben Nash is a finance expert commentator, podcaster, financial adviser and founder of Pivot Wealth. Ben's new book, Virgin Millionaire; the step-by-step guide to your first million and beyond is out now on Amazon | Audiobook.
If you want some help with your money and investing, you can book a call with Pivot Wealth here.
Disclaimer: The information contained in this article is general in nature and does not take into account your personal objectives, financial situation or needs. Therefore, you should consider whether the information is appropriate to your circumstances before acting on it, and where appropriate, seek professional advice from a finance professional.Sign in to access your portfolio