Saving large sums of money can be challenging. Between the cost of living, birthday presents, school fees, household expenses, groceries and other bills, it can seem as if there’s 13 days too many between fortnightly pay packets! It’s a common problem and one that can be overwhelming.

There’s two secrets when it comes to saving: small amounts and sacrifice. Setting a goal of $10 per day = $300 per month = $3,600 per year. But let’s bring it back to $10 per day. This is realistic and achievable, but requires sacrifice. So now you have the goal, let’s work out the plan.

Have a Payday Plan. Whether you’re paid monthly, fortnightly or weekly, try and move a small amount into an account specifically set up for saving. Many banks now allow you to create linked accounts online that you can’t access with your card. Most also allow you to name the account. We recommend DO NOT TOUCH as a good starting point! You can set up an automatic transfer or ask your employer to split your pay prior to seeing it. We tend to spend whatever is in front of us, so removing it from the start straight away is a tried and true approach.

Track your expenses. Most of us have a vague idea of where our money goes but a budgeting or cash management tool will tell you exactly where and what. To bring your spending under control you need to know what you’re spending on. There’s quite a few free apps out there – try the free one from Money Smart or the basic one (also free) from MoneyBrilliant. If you see significant patterns (e.g. 25% of your pay is spent on chocolate), then you’ll understand what reducing that expenditure will have on your overall budget e.g. what you could be saving.

Evaluate the 80/20 rule. Now that you’re using a spending tracker, you’ll probably see that 20% of your expenses will be costing you 80% of your money – but is it the best value for money? Review where you spend and you may be surprised to find you can easily cut one or two bigger costs in an area you don’t miss.

Stop buying lunch. Eating out is one of the most expensive habits you can have, especially as it’s hard to find a sandwich in the city for less than $10 these days. Consider bringing in leftovers, or buying a mix of salad ingredients from the supermarket on Monday to eat throughout the week. If you do need to grab lunch, forgo the juice or soft drink for tap water, and look out for lunch deals. We’re not saying you need to sacrifice eating for saving.

Use up leftovers. As we discussed in our family feeding blog, the average Australian family throws out 1/3 of their food every week, most of which would be fresh food that’s not so fresh. Our advice: never shop hungry, shop with a menu plan in mind, research what fresh fruits and vegetables are in season (which will be cheaper), replace meat ($13/kg for chicken) with more vegetables. What food you don’t use can be used in smoothies, frozen for another time, or added to soups. Blenders are fantastic for eliminating items that fussy eaters would view suspiciously!

Avoid ATM Withdrawals <$100. Some banks charge $2-$3 per withdrawal at an ATM for minimum amounts, which adds up at the end of the month. Instead, plan ahead and get cash out when making a purchase, such as at the supermarket or petrol station.

Avoid PayWave/PayPass. All contactless card payments are processed through the credit card network, so all purchases (even from a debit card) incur card processing fees, which can be between 1-10% of the purchase. So, if you’re buying groceries or food, and the charge is $90, you’ll be paying $1.35 in processing fees. Another issue with these payment methods is tracking and accountability – we’ve grown into the habit of tapping without processing what we’ve just spent. Again, it’s small changes that are going to help you reach your savings goals.

Buy second hand. Our cupboards and garages are full of stuff we no longer need or use. Garage sales and Op shops are great ways to pick up ‘as new’ goods for little to nothing. Sites like Gumtree and Freecycle can also be a great source for anything you are looking for.

Walk away before you purchase. Spontaneous buying can be the real killer. Before buying that ‘must have’ item walk away for half an hour or, better still, come back the next day if you really do need it.

Have Non-Spending Days. The 5:2 diet has been popular with eaters and now the 5:2 spending diet has encouraged people to not spend for five days of the week and only buy in the other two. You needn’t be this tough but one day per week of ‘unspending’ can help you achieve your objective.

Carry cash. Resisting the urge to splurge is easier when you remove the payment method. As an example, we went to the local markets on the weekend with $30 in cash. It meant we bought what we really needed, and not $5 cupcakes or $8 hot dogs, when the fridge was full at home.

Try the $5 Note Challenge. Essentially you put every $5 note that comes into your hands away in an envelope or into a money box. A number of people online swear by it. If you could put one $5 note away per day, you’re halfway to your daily goal. Forgo the coffee, walk or ride to a get together, put two things back from your shopping trolley.

Turn out the lights. Electricity prices are astronomical and not likely to reduce anytime soon. If you’ve not implemented energy saving actions around the house then get onto it. We also urge you shop around. There are many energy companies around now who are trying to get your business, so give them a call and see what they can do for you. Some even offer incentives to move over, such as vouchers or 12-month discounts.

Small savings can quickly make a difference. It’s about setting a goal and sacrifice. But think of the bigger picture.

If you’re trying to identify a savings goal, or methods you can use to save, you don’t need to do it alone. A financial adviser (or planner) spends their days identifying and presenting opportunities to their clients. Our simple, quick, free service will connect you to the best independent financial advisers, based on your needs. Click here to get started.

The information in this article is general in nature and does not take into consideration your personal situation or circumstances. You should consider whether the information contained in this article is suitable to your needs and where appropriate, seek professional advice from a financial adviser or other finance professional.

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