Rising Tide’s Sam Gawenda provides some helpful tips.
Why is it that many of us find it difficult to save, even after getting pay rises? This is usually because we see money in our accounts and we are habitually wired to spend the same proportions of it on the same costs. The best way to counter this is to set up a new account and set up a re-direct that automatically deducts 20 per cent of every pay. The rationale being “out of sight, out of mind.”
You can reduce living costs without reducing your actual lifestyle by choosing smart alternatives. Go to “tight-arse Tuesday” movies, drink at happy hour, holiday off-peak and buy petrol early in the week. And instead of catching up with someone at the pub for a couple of pints ($20) and a parma ($25), catch up with them over a couple of coffees ($7) or some smashed avo and eggs ($16). Plan and you’ll save.
Banks are always updating their products and cutting fees to entice customers to jump ship. Why not be one of those people? Speak with your bank, and if they are not willing to play ball, move on.
Once you have started to save, look at investing wisely to maximise your future return. Consider long-term, interest-bearing accounts; salary sacrificing some extra dollars for your super, or enrolling in a career-focused short course or post-graduate degree to improve your future earning capacity.
Note: Buying shares will include fees. If you’re on a low income it may not be the most cost-effective investment.
It’s never a great conversation to talk about the “what ifs”, but it is important to have a plan B. We recommend insuring against illness or injury so you’ll be able to cover your costs if something was to happen. The good news is that your super fund may include income protection automatically, so it may not be an extra cost. Check your super docs to see if you are covered.
There are a number of great apps available to help you manage and invest your funds. Here are three to consider: 1. Trackmygoals: Allows you to set, plan, track and manage your savings goals. 2. Acorn: Rounds up transactions and invests your would-be loose change on the stock market. 3. Splitwise: Helps groups of friends, families and those living in sharehouses manage shared bills and expenses.
Review your bank statements and budget at least monthly. That way you’ll become more aware of you financial activity and therefore more in control.
Note: In terms of budgeting, be conservative and over-anticipate your costs a little so you don’t get too burnt when you make a slip-up or two.
Doing your tax return properly may mean you’ll get a nice little surprise in July, so spend some time researching what you can deduct as work expenses. You might be pleasantly surprised.
Here’s a way to please “future you” and reduce the pile of mail on your kitchen table. Consolidate all your super funds into one so you don’t get charged fees on every account. They may not be that much now, but times them all by 40 years and you’ll be amazed at what they all tally up to.
People use fitness trainers for advice and motivation, so consider seeing a finance professional regularly to help keep your books on track. There are advisors out there (hint, hint!) who can tailor services for those on a low-income level.
Sam Gawenda is a director and leading specialist at Rising Tide
Note: This above is general advice only. For specific advice seek professional assistance.
