Australians have become better savers, with the household savings rate recently climbing to around 10 per cent of disposable income. Yet with the 2012 RaboDirect National Savings Barometer finding nearly half of all working Australians have only a month’s worth of savings in the bank, there is still plenty of room for improvement.
While doing a budget, putting money aside regularly and saving for a rainy day are all sound policies, there are many innovative ways to save money.
Change spending habits
Impulse buying is a killer, with a recent survey for RaboDirect finding that nearly a third of respondents had spent more than $500 on such a purchase during the past six months, with the main items being clothing and shoes.
While shopping only with cash can help curb rash purchases, those addicted to their credit cards still have ways to save. According to Ratecity.com.au, it is possible to save hundreds of dollars by switching to a zero or low-rate balance transfer card instead of trying to repay a higher rate credit card.
Help the kids
Make your kids future millionaires by investing as little as a dollar a day. According to Ashley Ormond, by making regular contributions, investing in growth assets, reinvesting all investment earnings and not touching the money, it is possible to save $1 million over a 50-year period, although you will need discipline.
Save on power
Rapid increases in electricity prices have made a dent in household finances, but it is still possible to cut power bills. Comparison sites including Make it Cheaper, GoSwitch and Switchwise offer the opportunity to compare prices and change providers.
Power saving tips include turning down the thermostat on the hot water system, switching to natural gas or solar hot water, installing insulation and washing your clothes in cold water.
First home buyers
For those saving for a first home (or parents helping out the kids) the little-known first home saver account offers a government-guaranteed 17 per cent rate of interest. Save $6,000 and the government will tip in another $1,020, one of the best tax breaks around for those aged under 60 years.
And when do you get a mortgage, take advantage of mortgage offset accounts to reduce the loan principal more quickly.
Creative savings tips
There are plenty of other creative ways to save:
- DIY – learn how to service your own car, grow your own plants and make your own gifts, such as baking a cake. Barter a service such as lawn mowing or baby sitting instead of buying a present.
- Carpool to the office, cycle, walk or use public transport.
- Offer to pay in cash for a discount; compare prices online.
- Put savings on autopilot by having wages automatically deducted to an account such as RaboDirect’s Notice Saver account, which restricts withdrawals.
It’s not always simple to change habits, but by becoming an innovative saver it can be possible to free up savings for useful investments.
This article is brought to you by RaboDirect. For more information on high interest savings accounts or term deposits visit RaboDirect