We work hard to earn our income and even harder to save it to achieve our dreams. Even a few dollars saved on different types of bills over the years can compound to something meaningful. Let’s go through some of the ways that can help achieve these savings.
1. Track your expenses
Why should you track your expenses? So that you can understand where you spend money and identify the unnecessary expenses that can be cut. First, review your past expenses and then track the future ones.
How to track your expenses? You could use an Excel spreadsheet or a mobile app to categorise your expenses into things like groceries, transport, entertainment, etc. Online tools allow you to categorise your expenses and will automate it for you going forward.
2. Give yourself a budget and automate your bills
There is a budgeting thumb rule of 50/30/20 which states that 50% of your after-tax income can go towards basic living expenses, 30% on miscellaneous expenses and 20% on savings. Once you understand how much you spend weekly or monthly, set a budget for yourself. You can set different amounts based on your personal situation such as 40/30/30 or 60/20/10.
Another small way to save money is by automating bills or setting up direct debits to avoid late fees.
3. Shop around for insurances
Just like shopping for clothes or electronics, shop around for insurance on your cars, home and contents, and personal insurances including Life, Total Permanent Disability etc. Usually, an insurance renewal notice is a good reminder. Companies often offer discounts to new customers, but rarely reward loyalty, so switching insurers could save you a few hundred dollars.
4. Pay annually rather than monthly
If you can, it’s worth making annual payments on your insurance, car finance or subscription services rather than fortnightly or monthly. Check with your provider if they offer discounts for annual payment – it’s always better in your pocket rather than theirs.
5. Controlled use of Buy Now Pay Later (BNPL) or credit cards
There are different views on the use of credit cards and BNPL services, but there is no doubt that they are popular. A cautious use of these services will create a better spending habit to keep you out of debt and reduce your impulse purchases.
For example, keep a credit card limit that matches your monthly budget and pay it off on time. It can be an effective way to track your budget, improve your credit score and possibly receive reward points.
6. Check for extra benefits on your current services
Did you know that there are types of credit cards that have in-built travel insurance and rental car insurance? If your credit card has such benefits, you can save on those costs the next time you go on a holiday.
Other services such as your car insurance or roadside assistance can have reward programs and offer discounts on movie tickets or online shopping to their members. It may be worth checking out what is available to you.
7. Refinancing
Home loan repayments are no different to your regular bills. Refinancing your loan may allow you a cheaper interest rate and the possibility of paying off your loan sooner.
You could also potentially consolidate other debt and receive additional loan features, such as an offset account.
Your home’s equity may also be able to be utilised to fund a renovation or purchase an investment property. A mortgage broker or a financial adviser can help explore this option with you.
8. Check for recurring expenses
Do you really need all your streaming subscriptions such as Netflix, Disney, Foxtel and Kayo Sports? Often, we forget about these recurring subscription costs as they can be small in dollar value. However, they do add up over time. Cancel any you don’t use and these dollars saved can be used to fund your next weekend trip.
Bonus tip: Negotiate your bills before switching providers
Before cancelling or switching a service, call your current provider and ask whether they can offer a better deal. This can work for utilities, internet, phone plans, insurance, gym memberships and even some subscription services.
Providers often have retention offers that are not advertised publicly, especially if you mention you’re comparing competitors. Even a small monthly discount can add up over the year, and if they can’t improve the price, you’ll be in a better position to shop around confidently.
