The fastest way to save.
Posted on May 11th, 2021
Got a savings goal you want to reach fast? Here’s four quick and simple ways to fast-track your financial goals.
- Don’t spend more than you make.
This one seems pretty straight forward and it usually is – but the key is knowing full-well where all your money is going. Track your spending over a month – each and every transaction. Pretty quickly you’ll see exactly where you are over spending and where you can cut back. Then it’s time to decide what is and isn’t important to you. Only you can answer these questions. Is it more important for you to be able to buy takeaway lunch four days a week or get $60 a week closer to your savings goal? No judgement– we all have different priorities. We’re not here to tell you how to live your life. It is your choice. But you do need to choose.
2. Set up your accounts.
With a bit of planning and preparation you can set in place a system that works for you without having to do the heavy lifting every time your paycheck comes in. Set up your bank accounts in a way that allows you to use each account for a single purpose. For example: use your main transaction account for your basic living expenses, like groceries, rent, fuel and insurance. Have a separate transaction account for optional purchases like dinners out, after work drinks or that cute new gym outfit you’ve had your eye on. This works well to help keep you accountable for your spending choices and will help you save without sacrificing ALL the things you love. Then there’s the all-important savings account. Money goes in – but NONE comes out. Not until you’ve reached that goal you’re chasing. You got this!
3. Set up your automatic transfers.
Now this is the important part. After tracking your spending for a while, you’ll get a good feel of what you can and can’t avoid spending. Decide on what % of your paycheck you can realistically live on. 60% is a good target – so aim for somewhere around there. Lower is great, but you need to make sure you are disciplined and stick to what you’ve set. So perhaps be a bit conservative for the first few months and then re-assess down the track.
Here’s a quick example:
Fortnightly income: $2,000
Living expenses – 60% = $1,200
Optional spending – 10% = $200
Savings – 30% = $600
On the day your paycheck comes in, set up an automatic, recurring transfer for each of the amounts you have decided on to go to each of the accounts you’ve set up. That way, you stay on track without the extra work. You can sit back and watch your dollars go exactly where you want them to!
4. Do the things.
We’re all for working smart, not hard. But sometimes you’ve just got to muck in and put in the work. This step can be time consuming and frustrating but it’s totally worth it. Ever heard of the lazy tax? No… then you are probably paying it. It’s the little extra increases on your big bills each year that you might not notice but can add up to hundreds of dollars. So what can you do about it? Well, don’t just sit there! The squeaky wheel gets the oil, after all. It’s time to do some research! As an example, let’s look at insurance. If you have no idea what you are paying or how it compares to what else is on offer, you may want to call around or get some online quotes from various companies. You can start right here with CGU Insurance through The Capricornian.
Beware of using comparison sites that may not give you a full picture of what is out there. Consider switching to The Capricornian if you think we could offer you insurance more suited your needs. You should always read through the Product Disclosure Statements to ensure the cover you are being quoted for is the right one for you and note any differences between quoted prices. Often, some policies may be cheaper because they have more exclusions or a much higher claims excess. You should try to compare apples to apples where possible.
This is also a great way to reduce your Living Expenses at the outset if your percentage is higher than you would like. Repeat this step for each expense. (Obviously, some prices are non-negotiable – like car registration, council rates and electricity – but you can sometimes get discounts if you pay early or pay annually instead of by the month. I repeat: do the research!)
If you need a hand with getting your accounts in order or would like a free financial health check, get in touch with us at The Capricornian. We got this!
Disclaimer: Insurance is issued by Insurance Australia Limited ABN 11 000 016 722 AFSL 227681 trading as CGU Insurance. In offering the insurance products, The Capricornian Ltd acts under its own Australian Financial Services Licence and under an agreement with the insurers, CGU. This is general information only and does not take into account your individual objectives, financial situation or needs (‘your personal circumstances’). In arranging this insurance The Capricornian Ltd acts as an intermediary for CGU, not as your agent. The Capricornian Ltd does not guarantee any claim or benefit payable under the insurance policy. Before making decisions about any of these insurance products you should consider the appropriateness of the information having regard to your circumstances and the applicable Product Disclosure Statement (PDS), available at any Capricornian branch or by calling 1300 314 900 The Capricornian Ltd ABN 54 087 650 940, Australian Financial Services License / Australian credit license 246780.