We all (well, most of us, at least) want more money. But as we know all too well, getting to that goal is easier said than done. In saying that, though, there are a few things we can do to dramatically grow our savings. A few simple tweaks in your lifestyle can set you up on a path towards getting together that house deposit or gathering enough funds for expensive life events like a wedding or a honeymoon.
Ahead, money expert Vanessa Stoykov shares on those tweaks, outlining four of the most common money traps, along with how to avoid them. From stopping chasing that purchase ‘high’, to opening multiple accounts, here’s how to grow your savings.
Avoid the Impulse Purchase
“Whether shoes are your thing, or whether it’s a new car, spending money without having a prior plan can often lead to trouble. While it sounds like common sense, a lot of the time we are buying things to give ourselves a short-term ‘high’. This high does not last, however, but what usually is the credit card debt, or hole in our bank account.
“Be deliberate in your purchases. That’s not to say you can’t have it. But plan it, do your research, find the best deal and THEN enjoy. Oh, and if you are buying it in on credit card without a firm plan and timeline of how to pay it off, best to give it a miss. Credit debt = trapped.”
Don’t Keep Your Money in One Account
“It allows you no control or visibility about where it’s going and what you are doing with it. Rather, set up at least three accounts, for which money is moved every time you get paid. The first is your working account (bills, everyday living) the second is your TREAT account (what have you been wanting that makes life fun?) and the third is the rainy day, don’t touch, hands-off account.
“The third account is the one that will help you sleep at night. Make it a high interest, hard-to-touch account. This gives you the peace of mind that if the worse happens you are ready. How you split the amounts is up to you – but at least 10% should go into your rainy-day account.”
Value Investing Over Consuming
“Think about assets that are rising in value, like your home, vs things that are falling in value, like your car. Start to think of your purchasing in terms of what can you buy that rises in value? If you have never bought a share, ETF or managed fund, you can do so through your super, or outside of super.
“Oh, and speaking of superannuation — are you putting enough in? You can put up to $24,000 a year in super at the lowest tax rate of 15%. It’s crazy not to take advantage of this tax saving, and prepare for your future. After all, according to research from Griffith University, up to 80% of Australians that are generation X and Y may fall short of a comfortable retirement.”
Not Asking the Right Questions
“Sometimes asking yourself the right questions is all you need to do to improve things in your life. And if you don’t know what to ask, you can’t get a result.
“After working in financial services for more than 24 years, and being exposed to some of the best professional investors from around the world, I have realised some simple questions like ‘Is this the best deal I can get? How much can I invest in myself? Do I really need this now? Can I get this cheaper buying online or in bulk? What do I really want for my life and how can I afford to get there?’ can help you save for a better future.”