A leading financial advisor has shared the saving tricks that will help you to save thousands in a short amount of time, including adopting the 50/30/20 method and never signing up for financial products on your partner’s behalf.
Helen Baker, from Queensland explained that if this year has shown us anything, it’s that you need to have some spare money in the bank in case of loss of income.
Helen revealed the top tips and tricks to help you save tens of thousands of dollars, no matter what your salary or financial goals are.
Helen Baker (pictured), from Queensland, shared the saving tricks that will help you to save thousands in a short amount of time
1. Use the 50/30/20 strategy to control spending
The first way that Helen said you can save a bit more than you already do is by adopting the 50/30/20 strategy to control your spending.
‘This simple yet effective budgeting method involves dividing your after-tax income into three categories,’ she told FEMAIL.
Put 50 per cent of your net income towards ‘must-haves’ like rent, utility bills, school fees and groceries, then reserve 30 per cent for your ‘wants’, like dining out, fashion and entertainment.
Finally, Helen said you need to keep 20 per cent back for loan repayments or building up your savings.
This simple approach will help you to save thousands over the course of a single year.
The first way that Helen said you can save a bit more than you already do is by adopting the 50/30/20 strategy to control your spending (stock image)
2. Consider salary sacrificing to superannuation
Helen’s second tip involves you voluntarily sacrificing some of your salary to your superannuation.
‘If you are looking to save a deposit for your first home, the First Home Super Saver Scheme enables you make voluntary contributions in your super fund and withdraw up to $30,000 of eligible contributions towards your home deposit,’ she said.
Concessional contributions made to an approved super fund are taxed at just 15 per cent, rather than the marginal rate of up to 46.5 per cent on your regular pay.
‘If you have an income of $70,000 and want to put $15,000 towards a home deposit, you can end up paying nearly $4,875 of that $15,000 in tax,’ she said.
By contrast, if you sacrifice $15,000 a year into your super through the First Home Super Save Scheme, you pay just $2,250 in tax per year and could have around $25,000 available for a home deposit after two years.
3. Avoid signing up for products on your partner’s behalf
It might feel tempting to sign up to products on your partner’s behalf as you are a couple, but Helen said it’s best to avoid taking out a credit card, loan or mobile phone plan on your partner’s behalf, in your name.
‘If your partner falls behind on repayments, it can affect both your credit ratings, and if you break up or your partner accumulated debt, and you are married or defacto, you will be liable for their debt,’ she explained.
Avoid rushing into joint bank accounts or co-signing loans, she added.
Even though it’s important to have joint finances and accounts when you’re in a long-term relationship or marriage, you must also have your own savings and emergency fund.
Helen said it’s best to avoid taking out a credit card, loan or mobile phone plan on your partner’s behalf, in your name (stock image)
4. Hide your savings account from yourself
When you set up a savings account, there is always a temptation to dip into it when you need a boost.
But Helen said you should set up a separate bank account for your savings, and ideally one that you can’t access with your current banking app.
‘Choose a savings account that charges withdrawal fees,’ she added – as the harder and more expensive it is to access your account, more likely you are to realise your savings goals.
5. Cut your spending instead of increasing your income
Smart spending can be just as good, if not better, than increasing your income, Helen said.
‘Look at expenses that you can cull, such as a subscription that you rarely use,’ Helen said.
You could also cut dining out as much and look after your existing items so you can use them for a longer period.
6. Create a bill strategy
Helen recommends that you outline all of your bills in a spreadsheet so as to avoid incurring any late fees and pay every bill when it’s due.
‘Ensure your calendar gives you adequate time to thoroughly check invoices and make sure you are not being overcharged,’ she said.
Try to group any bills into categories of $100, $100-$500 and $500 plus.
‘Smaller bills, such as mobile phone plans or other monthly service utilities, can be paid by setting up automatic payments,’ she said.
‘Larger bills, such as tax, rent or mortgage repayments, require more diligence. It is also crucial to pay substantial bills on time to avoid incurring a bad credit rating.’
Helen is a spokesperson for money.com.au. For more information, please click here.