How You Can Start Saving Today (Yes Even You!)
Imagine having an extra $10K.
This week on The Living Room, everyone's favourite money expert Jason Cunningham is starting a three month project to help four in-need families save cash. And not just a little bit either, we're talking $10K a pop.
Nothing to be sneezed at.
And yes, while he's talking struggling to pay off the mortgage, living pay cheque to pay cheque or swimming in a sea of credit card debt, as Jason works with the families to turn their financial dreams into realities, he throws up some very interesting money issues that everyone can relate to.
So, erm, Jason, what are you doing tonight, we need your help. Haha, only joking. Or are we?
With the ABC releasing a study that says most young Aussies aged 18-29 (well, a staggering 54 percent of them) have less than $5000 in the bank, 28 percent are over $5K in debt and the chance of even getting a home loan seemingly nigh on impossible, Jason says not to panic, and that we can all take control of our finances with a little work and some rethinking.
First up, he says, we need take stock of our money.
"We all work really, really hard -- at work, or at our own business, or for our boss -- and we're also really busy and we’re with our families and our friends and our boyfriends and sport and going to the gym -- there is so much going on, and we don’t spend nearly as much time as we should on our personal finances – the only time we do is when we go and get our tax return done, right?
I am a firm believer that if we take one day a year -- take a day off out of our annual leave -- and work on our personal finances I reckon you can make a month’s salary."
Wait up? What? A month's salary?
"Yep, how hard do you have to work to make a month’s salary -- pretty bloody hard, right? Spend one day and you can make that money!" he laughs.
We're listening, Jason. We're taking the day off as we speak -- now what do we do?
First Visualise what you want
"There has to be enough motivation for you to want to do it -– the mere fact of having five grand in the bank account doesn’t mean much to many people but if the amount of money in the bank account translates to holiday, or getting rid of your credit card debt or getting a deposit on a home or something and you can visualise that. you're more likely to want to change things. The concept of money isn’t that exciting but it’s what it can provide you that is."
Then Prepare a budget
"Now my experience tells me that most of us don’t have a budget and those of us that do, the budget doesn’t work for them anyway… it’s frickin' boring and we don’t know how to do it," Jason laughs.
"I prepare a budget every year -- I know it’s a means to an end and without that budget I have no way of getting to where I want to. I liken it to going to the gym -- I don’t necessarily like doing it or getting up at 530 in the morning but I know if I don’t go to the gym I won't be in as good a shape as I want to be. Budgeting is like the gym -- it's just a means to help me achieve my goals."
When you sit down and go though it all, you see straight away what you’re spending -- so for 50% of us, preparing a budget will instantly slow our spending down. "It will actually help us. It's like getting fit and in shape. If you have ever tried to lose weight they say you should keep a food diary, and the very fact you have to write that Mars bar into the food diary may help stop you eating that Mars bar…" Jason says. It's the same with budgeting. When you see where your money goes, you will be more inclined to not spend it so recklessly.
"Budgeting also gives you a goal to achieve and some parameters around your behaviour. And an understanding what type of spender you are can help you combat some negative traits if you have them." Negative traits? I have no idea what you mean, Jason.
And lastly Give yourself an allowance and stick to it
"If you find that no matter how hard you try you manage to spend more than you earn," Jason says, "one way to help is to give yourself an allowance. If you make it, let’s say $200 a week, then once that money is gone, the money is gone. Then you become really conscious of your spending behaviour."
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Feature Image: Getty