There are smart ways to increase your savings and anyone can do it. As they say, it’s the little things that count – especially when it comes to savings. It is not always what you earn but what you spend that can make you rich. Not buying that second cup of takeaway coffee each day or foregoing the odd big night out can make a huge difference to your nest egg over time.
Small Change Counts
James Taylor, business analyst with financial research firm CoreData Consulting, has crunched the numbers to show us exactly how much we could save by cutting back on those little luxuries.
“If you forego two coffees a day at $3.50 each over a year you’ll save around $2,500. If you invest this amount each year in a high interest account paying 6.0 per cent per annum after five years you would have around $16,000, which is more than enough to buy a new hatchback,” says James.
The savings are even greater when you cut back on more expensive indulgences such as big nights out. “If you save the $150 you spend each week on a big night out or two you’ll accrue $7,800 a year and around $46,000 over five years – which is a big chunk of change and close to a deposit on an apartment or a really good car,” says James.
Cutting Back is not Rocket Science
- Stop buying the paper each day and instead read it online. If the paper costs you $1.20 each day, you’ll save up to $438 a year. Taking into account interest, you would save more than $5,000 over 10 years by reading the paper online – as well as a few trees.
- Buy off season, in the sales or use online offers to get bargains on items you know you are going to have to buy.
- Have a retail therapy free month where you don’t buy anything new (unless you really need it). If you are looking for a bigger ticket item, consider second hand, or nearly new, this could save you hundreds if not thousands a year. Sites like Gumtree are fantastic for picking up someone else’s unwanted treasure for cheap.
- Walk home instead of grabbing a cab. Or use public transport instead of paying for expensive parking. Buying travel season passes can save big amounts of cash.
- Get into swapping. Books, clothes or even unwanted furniture can be traded. On the home-front look at doing a makeover on pieces you already have. Get creative and re-vamp instead of replacing.
- Take your lunch to work. Buying a sandwich and drink every day can cost around $200 per month.
The key message is this: if you look for savings in as many places as possible, you’ll save tens if not hundreds of thousands of dollars over time.
Saving money is a skill that is not difficult to learn.
Here are some more quick tips to save money:
- Use free Wifi instead of locking into a monthly internet connection.
- Read free ebooks online. There are thousands available.
- Buy generic foods like black and gold no name food.
Not Good at Saving? What About the Dollar a Day Method?
Many might not realize what a dollar a day can really mean. Just by itself it is 7 dollars a week, about 30 dollars a month, and 365 dollars a year. But what can that add up to over a long period of time while accruing compounded interest? By taking that 30 dollars a month and investing it at 10% interest that compounds monthly while reinvesting the profits you can end up with $67,815 after 30 years.