Here are some tips on how to save money

Living costs are on the rise, but that doesn’t mean you should give up having savings goals. These five rules work whether you want to save a little or a lot.  

1. Don’t spend more than you earn

Not spending more than you earn is the golden rule of saving; your very first step is to work out where your money is going. You may want to keep a money diary for a month, writing down absolutely everything you spend. If you don’t have time for that, look at your bank statements for the past three months. That will give you an idea of how much you’re spending, and what you need to cover regular expenses, such as rent or mortgage, utilities, etc. 

An online budget planner, like this one from Teachers Mutual Bank, can make budgeting easier. 

If you’re already earning more than you spend, congratulations, that’s a great start. If you’re not, don’t beat yourself up – you’ll just have to do a bit of ‘budget repair’ to begin saving. 

2. Work out your budget 

This is where you can plan to get more control over your finances. That may sound daunting, but it doesn’t have to be hard! After tracking what’s coming in and going out of your account, you can see how much is left over at the end of your pay, or how much you’re falling short by. Now you can make adjustments. 

Look at your take-home pay and categorise your expenses into essentials (those things you can’t avoid) and discretionary spending. 

Next, see if you can use a 50:30:20 rule to set yourself a budget. That means:

• half your take-home income goes towards essential expenses
• 30 per cent goes on discretionary spending
• 20 per cent goes towards savings or paying off debt. 

If that’s unrealistic, do a nip and tuck. One rule of thumb is to save at least 10 per cent of your take-home pay, but if that’s more than you can afford, start with a smaller amount. And don’t forget to budget for fun!

You’ll find more great advice on budgeting here.

3. Set yourself a savings goal

Now comes the enjoyable part. Set yourself a savings goal or a promise to pay off a certain amount of debt. That means you’ll have something to work towards and get a thrill when you achieve it. 

It could be anything from saving for a new pair of running shoes, having money for Christmas presents, or blitzing your credit card bill. Or maybe it’s for something bigger, like having an emergency fund, a new car, or a house deposit.

If, say, you have been living payday to payday, maybe set yourself a goal of saving $1,000 in six months. Feels hard? Then break it down. That’s about $42 a week – less than cutting out four $5 barista coffees ($20) and two $13 lunches ($26) from your weekly spend. 

4. Separate your money

Keeping your savings separate to your spending money is a proven way to stay on track. One of the easiest ways to do this is to have an everyday account and a separate savings account. To avoid temptation, set up an automatic transfer to your savings account just after your pay goes in. 

5. Make your money work harder

Getting paid more interest on your money means you can get to your savings goal faster. So, do your homework when it comes to choosing a savings account. 

Current interest rates for savings can vary widely. There may be minimum deposits and restrictions on withdrawals on accounts with higher rates, but if you’re serious about saving that may be helpful for you. 

Want to learn more ways to save?

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