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With any savings plan we really need to start with a specific purpose in mind. This specific
purpose must also have an estimated savings target (dollar amount) and time frame.
An example of this could be saving a $15,000 deposit by January 2010 for the specific purpose of purchasing
your first home, OR saving $2,000 for a 1 week holiday by June 2009. Whatever the purpose or objective it
is very important you have a clear picture of what you’re saving for, when you want to reach that goal
and how much you actually need, to fulfil that savings objective.
When you’ve decided on your savings goal write it down on a piece of paper and put it somewhere you can
refer to, on a daily basis, so that it is always in sight. Saving is not just about tweaking your daily
spending habits, it’s also about changing your mindset and adapting this new mindset to what you really
want to achieve.
We will now discuss the steps we need to take to effectively create a foolproof savings plan that will help
get you in the right frame of mind to save for your specific purpose:
The Budget
Budgeting is one of the oldest saving tools around but also probably the most tedious and boring things you
can do. Although boring and stale it is an important element to savings practice and knowing exactly which
direction your cash flow is headed.
With budgeting, it really is about how accurate you are with the data you put into it as this will ultimately
give you your outcome. The more accurate you are about breaking down your expenses and noting them down with
exact amounts and the specific time periods, the more accurate the budget result will be. It really is as
simple as that.
The budget will form the basis of your savings goal and whether your expectations are within range or out of
reach. We want to make sure that you can actually save money and that you don’t start your savings plan
on the wrong foot by believing that you can save more than what you actually can.
Please email info@whygroup.com.au for a budget
planner template or to request our budgeting tips checklist.
Separate Savings Account
Setting up a separate account for your savings plan from your everyday transaction account makes for smart
saving. This will enable you to track your money more easily and not waste your time going over your everyday
transaction account for money you thought you put aside for your specific savings goal. A separate online
account is really easy to apply for and in today’s market most major banks and financial institutions
allow you to open an internet savings account fee free with higher than normal interest rates. Ask your
bank or financial institution today about which product will best suit your personal situation.
Get Online
The use of an internet banking profile can really help you with your savings plan. By adding your separate
savings account with all your existing transactional and credit accounts you can more easily track and manage
your spending and cashflow. Although it isn’t mandatory to use the same financial institution for all
your financial products it does make it a lot easier when things are all right in front of you.
Online banking profiles are also a smart way to see how your spending habits and savings compare to different
time periods and how you are progressing towards achieving your savings goal.
Automatic Savings Plan
Now that you have setup your separate account directly for your savings plan a great feature which is common
with all financial institutions is an automatic transfer or pay/anyone function. This allows you to setup an
automatic payment from your everyday savings account where your income is deposited into to your new savings
plan/account.
This Automatic Savings Plan also allows you to nominate the frequency of the transfer and the amount you are
comfortable with. For example you may nominate to transfer $50.00 per week towards your saving plan account
for a specific period of time or until you have reached your saving objective.
This function will also allow you to save more frequently and because it is an automatically performed
transaction without any manual involvement (other than setting it up) there is less hesitation on your part
and more of a chance to build your savings plan account.
The Money Box
Some people may find this a bit childlish but the money box is definitely undervalued in today’s world.
Every time you go out and buy a newspaper, a coffee or even fill up at the bowser your more likely than not
to receive some change in coins. It may not sound like much now but every cent really does add up.
You have to make it a habit to put all coins from every transaction into your money box whether you empty
your pockets at the end of a night out or whether you have change in coins left over after you go shopping.
By all means you don’t have to carry the money box around with you but forgetting about placing the
coins in the box will defeat the purpose of having it in the first place.
The point is, that, if you never carry coins around and you have to break a note in every transaction you
will nearly always end up with some loose change that can go towards your savings plan.
An important point to mention is never give in to counting what‘s in the box until you either fill up
the container completely or have reached the desired time frame for your savings goal. Only in these instances
can you start counting and depositing the money into your savings plan account. Doing this will somewhat
remind you to keep saving until your reach one of these two goals.
Go Debit
I know it’s easier said than actually done but using credit cards can deter you from saving by taking
away the element of direction and affordability. In other words when most people use their credit cards for
purchases they either forget to pay the money they spent back into the credit card account or wait out the
interest free period then top up the account.
Getting into plastic debt to pay for goods and or services is quite fine if you have the money to pay the
credit card back in full but is not ok if you effectively stay in debt because of that purchase on credit.
The best alternative to a credit card with pretty much the same features is a debit card. A debit card still
has a credit merchant facility attached such as Visa or Mastercard which allows you to still buy online but
only allows you to use your own money. Although restrictive it will cut back unnecessary spending and assist
you in putting more of your savings aside towards your savings goal.
Ask you financial institution on whether you can have access to your debit account online to better manage
your savings and spending habits more efficiently.
Thanks for taking the time to read this article on SOLID SAVING PLANS and in the meantime if you’re
not 100% sure about anything please don’t hesitate to email us at
info@whygroup.com.au.
About the Author
Petros Arvanitis is a specialist mortgage planner who has helped hundreds of Australian’s rebuild
their credit, lower their repayments and plan for a brighter future. He is the founder of Why Group,
providing Australians with a simple and fresh approach to financial services.
Important Information
The information contained in this article is provided as a guide only and does not constitute financial
product advice. None of the information provided takes into account your personal objectives, financial
situation or needs. You must determine whether the information is appropriate in terms of your particular
circumstances. For financial product advice which takes account of your particular objectives, financial
situation or needs, you should consider seeking independent financial advice from an Australian Financial
Services Licensee. Why Group Pty Ltd makes no representations about the accuracy or suitability of the
information. Without limitation, this extends to any market research or commentary contained in this
article. The information is provided "as is" without express or implied warranty. Any person
viewing this article must make their own independent enquiries before relying on any information provided
in this website.
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