Want $5000? Don’t expect it from a pay rise, there’s an easier way to get your hands on some extra funds.
Source: Getty Images
David Koch offers some tips on how to budget successfully.
MISSED out on that pay rise this year? Still sore about it?
Well there’s a better way of snaring those much-needed funds and it’s easier than you think.
As it turns out, you’re probably among the 86 per cent of Australians who are leaving hundreds, if not thousands, of dollars on the table every year when it comes to personal and household expenses.
Or perhaps you’re among more than half who “set and forget” your utility providers which could be costing you up to $5000, or the equivalent of a pay rise or overseas holiday, a survey has revealed.
According to research conducted by Lonergan Research on behalf of low cost mobile service provider amaysim, three in five of us, or 62 per cent, consider ourselves to be rational decision makers.
But despite a vast majority believing they could be saving more, 15 per cent are unwilling to put the effort in to do so.
And 40 per cent admit they deliberately put off changing providers on anything from mobile phones to home loans, despite knowing a change would save them hundreds.
According to Ark Total Wealth senior financial adviser Chris Magnus, this was not surprising.
He said many Aussies chose to stay in a “budget rut” instead of undertaking a financial tune-up and this “money-saving paralysis” could add up to $5000 every year.
For example, an amaysim customer survey conducted earlier this year found savvy phone users could save up to $448 a year simply by switching providers.
He said other factors such as failing to transfer to transfer a credit card balance could also cost the average holder up to $1500 a year.
Forget loyalty, switching your balance transfer on your credit card can save you hundreds.
Source: News Limited
Switching electricity providers, as well as restructuring your mortgage, could also add up to thousands.
Mr Magnus said a simple switch on a $500,000 mortgage you could save up to $3500 a year.
And he warned it was just the tip of the iceberg, as people thought it was easier to stay with their existing service provider than switch.
“People do get complacent or think it’s too hard,” he told news.com.au
“But one of the first things I tell every client is that, if you take care of the pennies, the pounds will look after themselves.”
Mr Magnus admitted most people didn’t like saving for the sake of saving, yet could be pocketing $5000 without even trying just through making simple changes.
Michelle Hutchinson, money expert at financial comparison site finder.com.au, said she wasn’t surprised consumers were missing out on money every year.
She added that savings were crucial, even if people had nothing to save for.
“Saving the equivalent of three month’s pay is recommended as a good safety net in case you lose your job,” she said.
“Saving towards a goal such as buying a home or a holiday is motivating and can have positive psychological benefits.”
She said it made sense for some people to have no savings if they didn’t have any goals to save for, but that saving also went hand in hand with financial literacy and discipline.
“You need to make an effort with keeping track of your spending, setting and reviewing a budget, and comparing your financial products,” Ms Hutchison said.
“Without understanding how your financial products work and how much they really cost, and by being complacent about your money, you will never be able to save.”
You might not be able to have this every night but could afford a glass more often through simple money saving tips.
Still stuck on a budget rut, or unable to save?
Here are Mr Magnus’s money saving tips.
1. Separate your savings on payday:
“The best way to save is to limit what you have available in your access account to spend,” he said.
2. Prioritise paying off credit cards
He said a simple refinance to a 0 per cent interest could save hundreds while people should pay off credit cards before starting a saving plan.
3. Shop smart:
“Plan your meals for the week and look at the price per 100g on specials when shopping to make sure you’re getting the best deal,” Mr Magnus said.
4. Set a budget and stick to it:
Being organised is the key to financial freedom.
5. Start small:
Review your personal and household bills and find simple savings. It could add up to big bucks.
6. Choose wisely:
For instance, find the mobile phone plan that’s right for your needs, rather than paying for what you’re not using. It could save you hundreds in the long run.
7. Sense-check your mortgage:
Don’t be afraid to refinance, and always go for the best deal.
8. Spend super, not savings:
Paying insurance with pre-tax dollars from your super could save you big dollars as it is taxed at a lower rate.