I'm after some advice about how to stick to living within ones means.
DP earns really good money and I'm on reasonable good pay (when not on mat leave) but we have hardly any savings. I'd be highly embarrassed to admit how much we earn and how little we have to show for it!! I don't feel that we live a frivolous lifestyle (maybe we do and I can't see it) but never seem to have anything leftover. I want to have financial security for the future and don't really feel that we have that right now.
How do others save money / cut back expenses?
I'd love some tips.
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10-12-2015 11:49 #1
Living within means
10-12-2015 11:54 #2
You need a budget. Figure out how much your expenses/bills are and how much your income is and then you'll be able to see how much you could be saving. If you have plenty of $, I'd probably allow yourselves a weekly amount to spend frivolously on whatever and stick to it. Also, have a separate bank account for your savings and set up an automatic transfer for the savings amount so it's there and don't touch it
10-12-2015 12:00 #3
Track every single cent of what you spend for a month or two. From that you can get a good snapshot of where its possible to cut back, then you can create a budget and savings plan. No point doing a budget when you aren't sure of where all your money goes.
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10-12-2015 12:04 #4
start to see your savings as another bill. savings amount has to be put away first out of each pay. it will take less than one hour to set out your budget. that is every bill you that you get each month, or yearly, or quarterly, an allowance for fuel, and groceries, and clothing. these things are your known expenses, add an amount for unexpected expenses, maybe $500 for the year. now see how much income exceeds your expenses and take 10 to 15 % of that will be your savings amount. make that savings amount your first priority. once you see the amount of savings growing in the bank, you will be encouraged to keep going and maybe find more savings if you can reduce some expenses. marie.
10-12-2015 12:14 #5
Budget and separate accounts. We have several accounts - one we set up as a direct debit account, all our bills and mortgage come out of that account. We transfer a set amount of $ into that account each pay (monthly for us) based on what we've calculated with our budget. The other account is for spending or groceries, entertainment, petrol etc. That account gets emptied each pay cycle. We also each have a personal account we pay a small amount into each pay that is our individual 'do what we want with' money, and a high interest savings account. A set amount of $ gets transferred automatically into this savings account each month as soon as we're paid. That's our saving - and it's separate from bills, mortgage etc so it doesn't get touched.
It sounds complicated but works well for us. I think the most important thing is setting a realistic budget (that allows for incidentals), and at the very least having a set amount automatically transferred to a saving account each pay. Otherwise you end up just spending because the money is there.
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10-12-2015 12:36 #6
Our savings are transferred on pay days to our mortgage offset account. It's an automatic transfer and the money is just not available to use for everyday things. We don't even really think about it and it's always a nice surprise to see how much money we have in there offsetting the mortgage (so we save in 2 ways here).
We have a bills account which also has automatic transfers and all bills are paid for out of that account. It's easy to see how much we spend on bills doing it this way. We have an everyday account (groceries, petrol etc) and a savings account for DS to dump money into.
Look at if you can save money on bills - eg get better value insurance, electricity, gas etc. Think about if spending money on solar or rainwater tanks is worthwhile (it will save you a lot over many years - something we will do in our next house).
If you have a home loan and you haven't refinanced in the last couple of years then do it, you can save heaps in interest.
Do you have debts outside of a mortgage (eg car loans, credit cards) - if so pay these off as quickly as possible. Interest on loans is a huge waste of money so the aim should always be to pay these off as fast as you can and not to take them out at all if at all possible. Only use credit cards if you are paying them off monthly and not earning interest. We pay for things outright rather than taking on loans (except for the mortgage of course). The cc is for emergencies and large purchases and it is paid off immediately from our savings.
Look at food spending - food is a huge bill every month and IMO many people can cut back on their food bills by shopping and cooking smarter.
We don't earn a lot of money but we don't ever go without. If I want something I buy it, but in saying that I don't sped extravagantly. Getting DH to spend is like getting blood out of a stone so that helps at least!
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10-12-2015 12:36 #7
have an auto debit to a separate savings accounts after your wages land in your bank accounts. you won't even notice the money gone after a while and it piles up quite quickly.
I used to be shocking with never having any money. now I'm the opposite and can't understand living any other way lol.
tracking all your spending is a good way to see where your cash is going. you'll be shocked at how the little things quickly add up.
unfortunately there's no magic formula for saving. it's just old fashioned hard work and discipline.
identifying where your main expenditure happens is a good first step. suppose you discover you spend a lot on eating out. next time you get the urge to eat out or have takeaway, don't. cook something at home. ditto for shopping or Internet purchases etc.
savings won't happen unless you make them happen. do the auto debit thing. if you're ok good coin then $1000 a month between you as a minimum should not be a stretch. start with that then see how you go.
and don't spend the savings! if you don't see the point of just having money laying there, look at putting it into some shares. oh and make sure the savings account is a high interest account, may as well make your money work for you as best you can!
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10-12-2015 12:58 #8
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10-12-2015 13:30 #9
Thanks all for your feedback, it very appreciated.
I think the separate bank accounts thing might be a good idea for us. We'd always had all of our money in one account offsetting the mortgage to maximise the offset but it's meant that any 'savings' can't really be distinguished from everyday money and it gets spent.
CC is always paid in full at the end of the month and we have no loans other than a mortgage so no savings to be made there.
I've been talking to DP about doing a budget for a while. I'm going to lock us in a room and not let us out until it's done lol! And we are going to stick to it. My New Year's resolution
10-12-2015 13:34 #10
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