How to save money

If you can become a great saver, you will be able to buy nice clothes, travel or buy a car. So how do you make sure you have some money to save each week?

Set up a budget

The first step to saving money is creating a budget. A budget is a plan you make about what you’ll spend money on.

If you don’t have a budget, it’s easy to run out of money. Running out of money is ok if you live with your parents or carers. But if you’re living independently, you can’t let this happen. It’s important to have enough money in your account for emergencies or unexpected payments.

First, make a list of everything you spend money on

Write down all the things you spend money on each month.

It might be helpful to log into your banking app and have a look. It’s hard to remember everything. You might even notice some things you forgot you’re paying for.

Now write down anything you might have to spend money on in the future. Things like rent or transport.

The goal is to know exactly how, when, and why you spend your money. Lots of people forget where they’ve spent their money, especially on things such as subscriptions, streaming services and in-app purchases.

Follow the 50/30/20 rule

A simple way to budget is to follow the 50/30/20 rule.

50 percent of your pay should go on your needs: the bills you must pay and are necessary for survival (like rent, groceries, heating, cooling, water, etc.)

30 percent of your pay should go on your wants: the things you spend money on that are not essential for your survival (like going out, games, movies, streaming services, takeaway, etc.)

20 percent of your pay should go on financial goals: you should aim to pay down any high interest debts, or to save up enough for at least three months of emergency savings. This is in case you lose your job or something unexpected happens.

You may even want to set up separate accounts for your needs, wants, and financial goals in your internet banking. This will make it easy to save money for anything in any category and budget as you go.

Always prioritise your living expenses

This means paying rent and bills first before spending money elsewhere.

Think about setting up direct debits for all your bills and see what you have left over. If you do set up direct debits, make sure enough money is in the account on the day the money comes out. If the money is not there, your bank may charge you a fee.

Once you’ve dealt with your needs (rent and bills), you can decide how much you direct to your savings, and how much you direct to your wants.

Treat saving like a muscle

It takes a long time to get fit at the gym. You need to go back week after week and keep working. Saving is the same.

It’s easy to save when you’re living at home with your parents. But if you’re on your own, it can be much more challenging.

As long as you focus on it, there’s nothing stopping you from saving more than you imagine.

Helpful tip 1: Only spend what you have

The first thing to do is to only spend what you have. This is easier said than done, especially when ‘buy now pay later’ and credit card products are so easy to get.

If you never go into debt (spending money you don’t have), it will be much easier to save.

Helpful tip 2: Spend less

If you want to save more, you will need to spend less. Once you have made a list of everything you spend money on, is there anything that you could stop buying? Or anything you could do more cheaply?

For example, instead of buying your lunch, maybe you could make something at home and take it with you.

Helpful tip 3: Earn more

If you want to save more, you can also earn more or be smarter with the money you have.

If you’re working, can you ask for more shifts, or maybe you can sell some clothes you no longer wear?

If you love fashion, for example, consider thrifting second-hand clothes, or looking on your local online marketplace where you can buy and sell items.

Remember, a lot of businesses also offer student discounts. If you’re not sure, just ask. The worst they can say is no.

Having a separate savings account that's not connected to your debit card makes it harder buy things you don't need. Which means you'll save more money!

Helpful tip 5: Think first before lending friends, family, mob or community money

It’s great to help people out when we can, but remember your money is your money.

People may have great intentions to pay you back but sometimes they don’t for many reasons. So think about whether you can afford to lend out money.

Always know that if you lend money, you may not get it back.

Set short, medium and long-term savings goals

It’s important to not just save for big things like cars. If your only saving goal is something big, it’s time to create some more goals.

Start small. Try to save a small amount every time you get paid. Get into the habit of saving something small all the time.

Now look to the near future: a new phone, a new jacket, or a fun trip. Ideally, you can save for these things within six months.

Then think big. Do you want to travel, move into your own place or buy a car? Saving for these things may take more than a year.

It’s possible to save for the small, medium, and big things while still enjoying your life. The important thing is to have goals and stick to them.