If you think saving is hard, read on. Make it easier for yourself – or even second nature.
• Where’s your money going? It’s much easier to save if you follow your finances. Check your bank accounts at least weekly, and look at your spending patterns. You’ll find you become more mindful about spending and saving.
Turn your findings into a full budget and trim the fat from your current spending by setting targets for the month. Even $5 or $10 here and there adds up to a whole lot of saving at the end of the year.
• Stop spending. Most households could go without shopping for weeks. Just say no to whatever it is you want to buy. Keep a monthly track of what you haven’t spent and transfer that to your savings.
• Save it before you spend it. Plan to save a lump sum at the beginning of the month, not just what’s left over at the end. If your savings are automatic, you’re less likely to miss the money. Have your pay credited to separate accounts like savings, bills, and spending.
• Quit credit. Get rid of your credit cards and overdraft. Then it becomes harder to overspend.
• Choose savings accounts that aren’t easy to access. Term deposits lock your money up for a set time. ‘Bonus savers’ pay you higher interest if you don’t make withdrawals. ‘Notice saver’ accounts are even better.
You can add to your account whenever you have a few dollars spare, but you need to give 30 or 90 days’ notice to make a withdrawal. In the meantime, you earn competitive interest.
• Save straight into KiwiSaver. You won’t find another investment where the government pays you a 50 per cent return on your first $1042 of savings a year. Your employer also matches your savings, up to three per cent of your income.
• Create a regular savings plan. A number of investment companies allow you to drip-feed small sums of money into share funds.
Know how your head works
Saving isn’t just about dos or don’ts. Learning to save is just as much about understanding how your head works:
• Visualise what you’re saving for. Are you saving for retirement? For a trip to Europe? An electric bicycle? Your first home? Add a picture of your goal to your screensaver, or the back of your toilet door.
• Tell yourself the truth. It’s human nature to justify our spending. Be honest with yourself.
• Get your head read. Our brains evolved for fight or flight, not managing money. If you don’t save and can’t see how, then you might benefit from some help. Start with a budget or financial adviser. If your issue is deep-seated and you find it hard to change, a psychologist or psychotherapist could help you go one step further, to the root of the issue. People often have very complicated relationships with money.
Published September 2018
Story by Diana Clement
All content is correct at time of publication date. This article is general in nature only and has not taken into account any particular person’s objectives or circumstances. We recommend you speak with a financial adviser.