How to improve your money saving habits

In the last couple of years the way we use money has changed immensely. When I was young I lived in a cash society. You needed cold-hard cash to buy goods. Today we live in a plastic card society. It is difficult to keep check of how much you are spending because you only have to tap a plastic card and, hey presto, your money is gone! Soon we won’t even need that plastic card. Already we can get an app on our mobile phone and just wave our phone over a scanner to pay. One of my fears is that I will live to see the day when people get micro-chips embedded under their skin and payment is automatically deducted from our bodies! We live in a brave new world.

I believe that it is mighty hard to improve our saving habits given the way we use money is changing so rapidly, but today I do want to write about establishing good saving habits in this high-tech world.

Start tracking your money

The first step towards improving your saving habits is to work out exactly how much you are spending every day and every week. Before you try to improve your saving habits I want you to keep a tally of every cent you spend for one month. That is going to mean keeping receipts and going over your banking statements with a fine tooth comb. Many people have also set up automatic deductions for payment of phone bills, electricity and water, etc. When was the last time you actually read the monthly statements for these utilities? You may think you are on a great plan for your mobile phone but if you actually start reading the monthly statement you might discover you are being hit by other charges. The same could be true for other bills. Do you know how much the bank is charging you for using Eftpos? My point is there are many hidden charges but waving a plastic card around is too easy and many of us are blind to the fact that we are bleeding money.

To improve your saving habits you are first going to have to invest some energy into tracking your out-going money. In today’s plastic, auto-debit society that is much more hard work than you think!

Time for the saving to start

After a month of carefully tracking your spending, you will automatically be inclined to save. I say this because you are going to be shocked to learn how much of your money is being syphoned away by hidden charges!

Tracking money will lead you to be more cautious with money but the next step is establishing a budget. Once you have a detailed calculation of where your money is going, write down a broad budget. How much is spent on your mortgage, bills, food, clothes, indulgences, going out. Do not be too mean to yourself, but try and trim here and there. Instead of spending $4 on a cappuccino every day, what about investing in a coffee plunger for your work desk and buying some good ground coffee? The quality of coffee is comparable to a bought beverage and you will be saving dollars. On the weekend, make a delicious Moroccan lamb stew in the slow cooker and take some to work every day with a packet of instant couscous. Before you know it, you’ll realise that these home cooked meals are more delicious than bought lunches and definitely much cheaper!

You may find it easier to budget if you put your plastic cards away and go back to using cash. That is an easy way of keeping track of your money. I’ve heard of people putting their plastic cards in a bowl of water and freezing the water. That slows down the temptation to buy impulsively. Basically you can’t make an impromptu purchase because you have to wait for the ice to melt so you can free the credit card!

Work out what you are going to do with your savings

Do not just save, build up your reserves of cash then blow it on indulgences. The first thing you need to do is establish an emergency fund of at least $2,000. If you do not have private health insurance I’d suggest aiming to save at least $5,000. Put it in a long-term savings account. If you one day need to see a medical specialist or need an operation you can use this money. Public hospital waiting lists for procedures like knee surgery are very long. One day you might be very glad you have an emergency fund!

Set up another savings account with a specific purpose in mind. Would you like to buy another property or save for your retirement or save to help your children pay their university fees? Make sure you contribute a fixed amount to this account every week. Set up automatic deductions that are paid straight into this account.

Even if you don’t have a lot of spare money, set up short-term saving goals. Can you save $20 a week? In a year you will have saved more than $1,000 and that could come in handy at Christmas.

Think of the future

Regardless of how old you are, start saving for your retirement today. Investigate and see what tax offsets you are eligible for at work. Every time you receive some extra money, such as a tax refund, put it into your retirement savings.

This sounds like something your nanna might tell you, but put all your loose change in a jar at the end of the day. If you put aside $2 to $3 everyday, by the end of the year you will have saved more than $1,000.

You are allowed to occasionally treat yourself but use it as an opportunity to invest in yourself. Would a new laptop make you more productive at work? Would attending a self-development seminar open new opportunities for you?

There are many smart and savvy ways to teach yourself to save. Before you buy something new wait 24 hours and see if you feel the same way. Calculate what you spend in terms of how many hours it would take to pay for the purchase. Unsubscribe to companies that email you with special offers. I get travel sale alerts and they are always tempting me to go on holidays.

If you don’t freeze your credit card (in a bowel of water in the freezer) at least put a sticky label on it that reminds you to think twice before buying. The label might say something like, “Do you really need this?” or “How will this affect my savings plan?”

Implement just a couple of these measures and before you know it your bank balance will be burgeoning!