Recently, some of our advisers visited the University of Queensland to present ideas on how to reduce financial stress. They knew that it was going to tricky to talk to students about saving money.
Everyone in the audience is focused on passing their degree and getting the most fun out of life as possible. Saving money? Isn’t that the opposite of having fun?
A boring concept like budgeting is a difficult thing to sell. But it’s not impossible. Our presentation got the students thinking about little things they could be doing now that could make a big difference later on. And even if partying was the number one priority at uni (after lectures, exams and assignments), when they graduated and started climbing the career ladder, our tips could actually come in handy.
If you have a child or a grandchild who’s somewhere between school age and settling down with a family of their own, this article for saving money might be just the sort of thing you’d like to share with them.
Make a list
The most important step when you’re trying to save money is to make a list of all your expenses. Write down everything (and we mean everything) that you’re spending money on. That could be petrol, coffee, gym memberships, streaming subscriptions and a whole lot more.
There’s a good chance you’ll be surprised by how much small things, like yummy treats for your dog, are eating into your savings. Given that just about every purchase is a tap-and-go transaction, you could easily be overspending on things that feel like nothings.
Sort out the wants from the needs
Now that you’ve got a list of all your expenses, grab a highlighter pen and pick out all the things that are needs.
You need to pay the rent. You need to buy groceries. Do you need your cavoodle to be professionally groomed every four weeks? Maybe, but we’ll leave that up to you. These are difficult decisions to make. But they have to be made.
By the way, we’re not saying that all your wants have to be binned. Budgeting shouldn’t be about existing. It’s about controlling the wastage and making sure there’s also room in there for the things that you enjoy now and the things you’ll want to do in the future.
Think of your budget goal as a bucket
As you can see in the diagram, the money that flows into your bucket, flows back out again in four ways.
The percentages here are just an indication of what is often typical. They will vary for different people and different circumstances, but they’re a good place to start.
60% goes to your regular expenses, those unavoidable costs that have to be covered. This consists of daily costs like transport, weekly costs like groceries and a percentage of yearly bills like insurance.
10% goes to short term savings
10% goes to long term savings
20% goes to an emergency fund. It’s always good to have a buffer of cash that you can turn to if you get hit with an unexpected expense like fixing the car or replacing the washing machine.
The above are all based on examples only and it will be slightly different for everyone.
Set up separate bank accounts
Back in the days of cash, families would often divide the notes up and place them into different envelopes. This physical divvying up of cash meant that the money was sure to be there when it was needed as different expenses occurred.
Today of course we don’t get paid in cash. However we can replicate the envelope system by setting up different accounts. It’s a great way to push money into short and long term savings, ‘locking it away’ when saving money for those new boots, big holiday or house in the future.
Make impulses impossible
If all your money is sitting in one bank account, it’s easy to kid yourself that you’ve got plenty of money. It’s such a simple trap to fall into.
Can we go to Bali? Sure, why not? The bank account’s looking pretty healthy.
Set up automatic transfers each pay day so that short term and long term savings money gets siphoned off first. That way, the money in your day to day account is all that’s available to you.
Rediscover your WFH habits
During the Covid lockdowns we couldn’t go to the corner café to buy lunch. So we got into the habit of making our own.
Why not do that now? Imagine if you made a sandwich before you left home. You could be saving yourself $60 or more each week.
If $60 doesn’t sound like much, grab a mortgage calculator and do the math. An extra $60 a week could help you to pay off your home loan 5 years sooner!*
*Calculation based on: $500K loan, 30 years term, interest rate 6.24% with weekly principal and interest repayments of $770. Source: Repayments Calculator (commbank.com.au)
If you would like more information please call 1300 ELSTON or contact us.
This material has been prepared for general information purposes only and not as specific advice to any particular person. Any advice contained in this material is General Advice and does not take into account any person’s individual investment objectives, financial situation or needs. Before making an investment decision based on this advice you should consider whether it is appropriate to your particular circumstances, alternatively seek professional advice. Where the General Advice relates to the acquisition or possible acquisition of a financial product, you should obtain a Product Disclosure Statement (“PDS”) relating to the product and consider the PDS before making any decision about whether to acquire the product. You will find further details of the service we provide and any cost to you within the Financial Services Guide. Any references to past investment performance are not an indication of future investment returns. Prepared by EP Financial Service Pty Ltd ABN 52 130 772 495 AFSL 325 252 (“Elston”). Although every effort has been made to verify the accuracy of the information contained in this material, Elston, its officers, representatives, employees and agents disclaim all liability (except for any liability which by law cannot be excluded), for any error, inaccuracy in, or omission from the information contained in this material or any loss or damage suffered by any person directly or indirectly through relying on this information.
Want to relax with a good book over the break? Well, our advisers have shared some titles they've really enjoyed recently. Check out the list to see if there's something you might want to dive into this summer. Read more
Over the break you might find time to chat about your dreams and hopes for the years ahead. To help make the most of those discussions, our advisers have shared their thoughts on topics worth unwrapping. Read more
With the festive season fast approaching, giving back becomes front of mind for many of us. Those with children or younger family members also start to think about how to use this time of year to teach our loved ones that much joy comes from what you give and not what you receive. Read more
Rising interest rates are making it harder for young Australians to buy homes. As a result, many are turning to their parents for financial support to make their homeownership dreams a reality. But what's the best way to support them, and are there any pitfalls to avoid? Read more
When Craig Roberts recently completed his Masters in Financial Planning and won the Gwen Fletcher Award for topping his CFP class, he didn’t make a big fuss about it. Anyone who knows Craig, knows he’s a very humble guy. Read more
Downsizing your house can be an emotional decision but there are many upsides to it too. Elston Strategy Adviser Christie Wilson explains how it can benefit your super. Read more
A lot of Australians like to give back. We’re a generous country. Giving our time through volunteer work and donating to charity is simply what we do. It just seems to be part of our life. But what about more structured forms of philanthropy? Read more
When we caught up with Sam McCarthy from Fresh Finance, he was happy to give his take on what it's like to team up with Elston and work collaboratively to help clients. Read more
With recent data breaches at Optus and Medibank, cyber security is back in the headlines. In this video Ben McNamara tells us some of the things we can all do to stop scammers stealing our personal information. Read more
If you have a child or a grandchild who’s somewhere between school age and settling down with a family of their own, this article might be just the sort of thing you’d like to share with them. Read more
Spring is a great time to throw open the doors, roll up your sleeves, crank up your favourite house-cleaning music, and clean out those cobwebs. It's also a good time to spruce up your finances. Read more
When you think about estate planning, you’re probably focused on who you should leave your assets to. But through the estate planning process, you might also find yourself thinking about the legacy you could be leaving. Read more
Our inaugural Team Development Day brought together a great group of trusted partners and professionals. And from all accounts the event was a big hit. Watch the video to learn more. Read more
The arrival of the 2023/24 tax year brings with it a number of opportunities. In this article our Elston advisers have focused on four options that you, a friend or someone in your family might want to consider. Read more
We all daydreamed about what it would be like to be catapulted into a life of riches. But if it really happened to you, what would you do? There are 8 things you might want to consider. Read more
With the end of the financial year fast approaching, some of us are thinking about wrapping things up neatly in a bow and making sure we don’t get stuck with an unnecessarily large tax bill. But for others, the end of the financial year is a beginning. Read more
On the 14th of May Treasurer Jim Chalmers delivered a Federal Budget that was in many ways unsurprising. There were prudent and responsible measures, cost of living initiatives and promises to move on big issues like housing. Read more
This time of year, in the weeks leading up to June 30, is like a big game of chess. This is when advisers are working out which moves are going to be the ones for those clients who are hoping to improve their tax position. Read more
The universities aren’t offering Masters of Empathy or Diplomas in Advanced Listening. But maybe they should be. In this Professional Planners article Elston Strategy Adviser Jessie Hinds talks about the soft skills that enable advisers to really build trust with their clients. Read more
Mark Westcott from Rural Succession Solutions recently interviewed Elston Director and Private Wealth Adviser Peter McVeigh to talk about some of the frequently asked questions on rural succession planning. Read more
Self-Managed Super Funds (SMSFs) have gained immense popularity in Australia. But just because ‘everyone else’ is doing it, does that mean you should too? FOMO is never a good reason to make a major investment decision. Read more