Whether you’re looking to save up for a car, house or that holiday you’ve been wanting to go on, the saving up part of the equation might seem the most daunting but take our word for it – nothing is too hard!
Picture yourself boarding that plane for your dream destination, not a care in the world, ready for your best holiday ever! Now with that image in mind let’s get you where you need to be.
The first piece of advice I’m going to give you is print out a picture of what you want from that $10k and put it up somewhere you can see everyday – whether that’s the shower screen or the cork board in your office.
Now bear with me, it might seem tacky at first but psychologically having this kind of visual in your mind allows you to grasp those abstract aspirations or intentions and turn them into more concrete plans and goals. Give it a try!
Now onto some steps you can take to save that mula within the year:
Step 1) Inform – Know Where You’re at to Plan For Where You Want to Be
Before you build a budget, have a good idea of where you’re spending your hard-earned money.
‘Track your spending’ is no longer code for hours agonising over spreadsheets and manually entering in each and every purchase and expense. Apps like Frollo do all the work for you.
Do you know how much you earn and how much you have left over at the end of the month?
Whether you’re spending more or less than what you think you are, you can’t move forward without knowing the facts.
The easiest way to do this is setup a budget in Frollo. We’ve made it very easy by building on the “buckets” or “envelopes” budgeting method – except our app does the hard work for you! Read more how it works here.
Step 2) Insights – Gain an Understanding of Your Current Spending Habits
Check in with your finances frequently to identify problem purchases or binge spending. Alternatively, use Frollo to flag them for you.
As you use the app over time, Frollo learns your habits and helps you curb problematic spending by identifying opportunities to save money based on your history and comparing it to others in the Frollo community.
Some examples of our community using savings goals include:
- The have dinner at home challenge is our most successful. Users have saved over $200k this year. Learn from their success – if you have one meal at home a week instead of at a restaurant, you could save $1,500 a year. The success rate for this challenge is currently standing around 65-70%.
- That said, 8 out of 10 of our most successful users participate in multiple challenges at once including cutting back on transport, using their cars less, reducing the usage of taxis or ubers. Average savings for our users is around $55 a month for the Bus vs Uber challenge.
- Use less cash and take advantage of apps that help you track your spending. It’s harder to spot the leaks in your spending if you’re always pulling out $100 a week in cash. Out of that withdrawal, not knowing where $20 went a week equals $1,000 a year unaccounted for.
Which costs make up the majority of your weekly, monthly, and annual expenses? Take a deeper dive into finding out what these are.
These are often fixed expenses or frequently-purchased items. Don’t rest on your laurels.
Take a few minutes each month to research if you’re really getting the best rate on your mortgage. If you can get a better credit card deal or if you can bundle your phone and internet costs. It’s suggested that only 20% of us are on the best deals for our circumstances. Big companies have retention departments for a reason. You have every right to get the best rates so jump on the phone and call your utilities companies – you can find scripts online to help you if you don’t know what to say! Check what rates you are on and then get on price comparison sites. Don’t be afraid to take your time!
Step 3) Impact – Be Inspired to Set Goals and Make Changes You Will Stick to
Whether you’re saving for retirement, a wedding, an emergency fund, or that big adventure abroad, break down big goals into manageable bits.
When do you want to reach your financial goal? Because of the work you just did to understand your expenses, you should have a good idea of how much can you put aside each week towards your savings. This process is the key to success; it is paying yourself first. Prioritise the saving as the first thing you do when you get paid. Then, it’s a matter of paying attention throughout the month to make sure you don’t need to dip back in to all your hard earned work.
Use online resources to learn and improve
While banks and lenders exist to offer you services, they’re a businesses first and foremost. Don’t let them profit off your naivety. There’s a reason that concepts like compound interest, maximising your tax deductions and refunds, and investing your savings in more than just a basic savings account are marketed as ‘boring’ and ‘complicated’.
Listen to a few podcasts. Watch a few YouTube videos. Use the Frollo app and check out the Frollo blog. Improving financial literacy has never been easier than it is right now with the world at our fingertips.
We also recommend reading The Barefoot Investor; his basic guide to managing your finances can quickly get you started, and he has a free handy PDF on his website that will give you a taster or you can borrow his book from the library or a friend.
Set Mini Goals
Bring a bagged lunch to work. Walk or take public transit. Host a potluck dinner party instead of going to that new restaurant. Brew your own coffee.
A few little changes each week can add up to thousands of dollars a year.
Find your Squad and Share your Goals
Surround yourself with a community of people trying to achieve similar savings goals. Sharing your goal will increase your chances of success. Learn from one another, support one another, and keep your savings goals front-of-mind.
Frollo’s app lets you connect with a dedicated community in Australia working to improve their spending habits and reach their version of financial freedom.
Your success is contingent on getting your insights on your money, getting inspired to try new things, and celebrating the progress you have towards achieving your goals.