Ever heard of the top-selling book 7 Habits of Highly Effective People?
Well, this is like kinda that, but to save money… which is to say – building savings habits today for the joy and delight of your future self. With one less step – win win!
So, you’ve left home or you’re about to receive your first pay-check, and now what?
Do you spend up large, consuming pay-check to pay-check?
Living off the vibe of a ‘she’ll be right’ attitude but in reality that often means more debt?
Having a savings plan
Unless you are counting on long lost Great Aunty Dorris bequeathing you riches, or you’ve got a stash of treasure buried in the garden, you’re going to need to start thinking about the life you’re setting up for yourself through the decisions and actions you take today.
This means both managing debt and having a savings plan. (Don’t believe us? Get your dose of reali-tea here by entering an interactive simulation).
It all sounds very sezzy doesn’t it? Well, think of it like this – the best way to learn how to save money is to start doing it.
Start saving money early with our jam jars approach to creating a monthly budget – this will give you lots of time to get things right, and make a few mistakes along the way.
How to start saving money:
1) There’s no point trying to figure out how to save money if you have credit card debt, hire purchase interest costs, or other debt interest gobbling your income. So first on your step towards saving is to clear your debts.
Not sure how? Make it one of your short term goals and learn about our Debt Dilemma workshop here.
2) Keep track of everyday expenses (and reduce them where you can) – this will make a big difference to understanding your relationship to money and saving.
Check out our ‘budget planning for students’ blog to get to know your spending habits and priorities a little better.
3) Make a personal budget – and stick to it! Feel free to download a budget template you can use here.
Don’t have a regular income yet? It’s important to get a grasp on budgeting so you can take advantage of this skill set when you’re earning the big bucks.
4) Be clear on your savings goals – make them realistic, you don’t want to put yourself off by being overly ambitious. If you make your savings goals too hard, you’re less likely to stick to it.
Little and long is the key to developing the money habits and getting the treats!
5) Calculate the savings you’ll need per paycheck to reach your goal. Watch Phil’s video here to see how he saved money for the car he wanted.
6) Pay yourself first – the most important saving habit of them all! Make your saving automatic by putting money straight into your savings account (like a direct deposit) before you do anything else with your paycheck. You’re less likely to notice (spend) it, and you’re not at the mercy of being reeeaallly good with your everyday expenses.
Paying your future self is where it’s at. Bonus points for setting up jam jars for your weekly income – see below.
Going on your dream holiday or buying that mean car – putting your savings plan into action
Jam jars is one method of organising how you save money and how you spend money. Each time you get paid, transfer your money into four (or however many you want to have) different jars (bank accounts). For example:
This jar contains money for all your day-to-day living expenses (fixed and variable expenses from your budget) like grocery shopping, rent, power bills, petrol/public transport costs, car insurance, gym memberships, streaming services etc.
Having fun is a valid goal, even when you’re trying to save hard. This jar contains money for the fun stuff (discretionary expenses from your budget) like going out to dinner or to the movies, clothes shopping, impulse buys etc.
This jar contains money that is going towards your savings goal. Bonus tip – if you know what you want, like the car or holiday for example, give the bank account that title to get you inspired to save. From your budget you should know how much you have leftover to put towards savings.
This jar contains money that you want to invest. From your budget you should know how much you have leftover to put towards investing. If you’re not yet at the stage of thinking about investments, you could set up an emergency fund for those unexpected expenses like the dentist or car repairs.
All you need to do is set up each bank account within your online banking, and give them the jam jar names.* Set up automatic transfers for each amount so your money flows where you want it to go. Financial freedom, here you come!
*No jam need be consumed in the making of your mint life.
To go through these 6 steps to be debt free and save more money with help and tips from us, sign up to get started on your Launchpad journey today.
Any savings pātai? Get in touch with us here.