Turns out we’re not a nation of savers.
Collectively, Australians are only saving about two per cent of their incomes. That’s down from 10 per cent during the global financial crisis, when households got nervous about the economy.
That figure, known as the Household Saving Ratio, has been trending downwards for the past decade, while consumer spending has been heading up — reaching an all-time high this year.
“We feel better when we treat ourselves,” says organisational psychologist Isabel Metz from Melbourne Business School.
“Because we’re in a reasonably affluent society and marketing is so prominent, generally speaking we are quite materialistic,” she says.
But if you want to cut down on spending and start growing that savings account, there are some simple tactics you can try.
Pick one thing to cut out
The first thing to do is make a list of everything you earn and everything you spend. What’s left over?One couple, three jobs, zero holidays. The realities of buying property in your 30sRoss and Sangita live in Melbourne and work three full-time hospitality jobs between them. They’re thinking about buying an investment property, but can they afford it?Read more
If you’re spending more than you earn, you’re probably going into debt which means there’s little (if anything) left to save.
You can start saving by cutting out just one thing that costs money.
It might be cancelling that gym membership you never use, bringing your lunch from home or borrowing books from the library instead of buying them (yes, libraries still exist and they’re fantastic).
If you add up how much that one thing is costing you over the year, it can become pretty clear how small things add up.
Try using cash
We’re increasingly using cards to pay for things, but that makes it easier to spend.
“When you tap a credit card on a machine, you don’t really live that experience of parting with money,” says Dr Subrato Banerjee, a behavioural economist with QUT Business School.The reasons we shop when we shouldn’t, and how to stopCan’t stay away from shopping centres or scrolling through online stores? These are the signs your shopping might be a problem and why so many of us feel compelled to keep browsing.Read more
So, try going back to using cash and allocating a certain amount to each area of spending.
You could separate the cash in envelopes or just in sections of your wallet.
That way you can clearly see how much you’ve planned to spend on groceries or luxury items, and you’re less likely to overspend.
“It’s a form of budgeting,” says Ms Metz. “It’s what our parents used to do when they received their pay in cash. They divided the money into bundles.”
If you find cash inconvenient, there’s another way to stop yourself overspending.
“Having a separate savings account works very well,” says Ms Metz.
“As soon as you get paid, you put a percentage into that account and it stays out of bounds.”
It’s easy to set up through online banking under ‘automatic transfer’.
If you can’t trust yourself to dip in to that account, you could put it in a short-term deposit. But make sure you’re getting a good rate of interest because it will cost you to break the contract if you have an emergency.
Try the $5 challenge
If you’re using cash, the $5 challenge is a way to try to save with minimal inconvenience.
The idea behind it is simply to never spend your $5 notes.How to save money on your weddingWith the average Australian wedding costing about $30,000, we asked you for tips on how you did it for less. Here’s what you told us.Read more
Every time you get your hands on one, stash it away. After a couple of months, add up how much you’ve saved.
Track down your lost money
It’s everybody’s dream: finding a treasure chest full of cash.
There’s around $1.1 billion in lost bank accounts, shares and life insurance in Australia, and some of it might belong to you.
Put in your details here to find out if you’re missing cash.
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Do the 52-week challenge
This is a nifty little trick that can help save you nearly $1,400 a year.
You can start by saving $1 the first week, $2 the second week and so on, until you’re saving $52 a week at the end of the challenge. Easy, right? All up you’ll save $1,378.
Or you can do it the opposite way and count down, so you get the hard saving out of the way at the start of the year.
Stop and think before you buy
Instead of ‘see it, like it, buy it’, try: ‘if in doubt, leave it out’ (of the shopping basket).
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If you can’t answer yes, don’t fool yourself, and put it back.
And for bigger items, sleep on it.
“If you have tried on that beautiful pair of shoes or gone for a spin in a car, don’t buy it immediately. Try to discipline yourself to say, ‘I’ll sleep on it and we’ll see what happens tomorrow’. The impulse is often gone by the next day,” says Ms Metz.
You’ll feel better for it. And so will your bank balance.