Once you have reached the stage where you can start saving money, you should have already decided on a financial goal, tracked your expenses, started a budget, and made plans to pay off your debts – so, what’s next?
Now that you can see where your money is going, you can make informed decisions about how to save even more to get the most out of your savings.
The easiest way to start saving is simply to start – set a savings goal and build a budget. By managing your money, you can put your plans into action.
Setting a savings goal
People often ask whether it’s better to set aside a dollar or a percentage amount as savings.
I reckon it’s smarter to think about your savings in percentage terms.
Earning money isn’t always consistent, particularly if you do flexible hours or have a side hustle – or two. Sometimes automatically transferring a portion of your paycheck might not make sense and leave you short of cash.
If you set aside a percentage of every dollar you earn instead, you can maximise your ability to save.
Keep your money in the bank
To make the most of your money in the bank, don’t withdraw it.
It sounds simple, but once you start dipping into your savings, you don’t allow compound interest to work its magic. That’s the bonus interest you earn on your initial savings and on the interest you’ve earned on your savings – interest on top of your interest.
The longer you leave your money in the bank, the more compound interest you’ll earn and the sooner you’ll reach your savings goals.
Research the different high-interest savings accounts available to ensure you get the most bang for your hard-earned bucks.
Save while you spend
Saving money doesn’t necessarily mean missing out on the things you need right now or the lifestyle you want.
You don’t always require a big chunk of cash to pay for the things you need now – Buy Now Pay Later (BNPL) services break down the cost of your purchases and allow you to spread payments over a longer period of time, letting you spend while you save.
Gimmie goes one step further and gives you the flexibility to afford life’s big buys and pay over one or two years in instalments that suit your lifestyle.
For more financial education tips, head to On the Money with Mark Bouris
