Episode 49: How to save EVEN MORE MONEY!
April 4, 2022
Our previous episode on saving money (you can click here to listen) has been one of our most popular episodes to date. So Sarah and Trudi revisit the topic to run through some more tips on how to save money and how to properly manage your cash flow so that you can save your money. From separate savings accounts, to reducing spending to shopping around, the girls break it down it to useful usable steps to ensure you have more money in the bank. The Government's Moneysmart website also has some really great tips and tools that we reference and highly recommend you check out.
Podcast Transcript Available Here
Duration: 17:39
Trudi Cowan: Hello. Hello and welcome back to the financial FOFU podcast. Everyone. Today we are piggybacking off one of our most popular episodes ever, which was about saving money Sarah Eifermann: Ever popular, ever. It got so many listens. So, obviously how to save money and more money. Trudi: You guys obviously all want some tips on how to save money. So, we thought we would refresh and have another chat just on that topic. Sarah: If you haven't listened to the first episode, it is season one, episode three, get stuck into that. It's not a long episode. It's a really quite short one, but these are kind of, well, I shouldn't say common sense because they're obviously not. But, for those that perhaps are a little bit more diligent with their money there are things that they would do that are great tips to share with other people. And they're pretty similar to what we're going to talk about today. Trudi: Yeah. They are. And look, the first tip that I like when it comes to saving money is that I find that it's a lot easier to save for money. If I have a goal. Telling me to just save some money, doesn't really cut it for me. But if you tell me to save so we can go on a holiday or save so that we can buy a car or put money towards a house, then I find it a lot easier to have that, I guess, as that incentive, to start putting some money aside. Sarah: A goal doesn't even need to be like a holiday or a house. It might be a weekend away with friends. Trudi: Could be a new handbag. Sarah: Trudi does like handbags: I like shoes. Trudi: It could be something as small and as simple as that. Sarah: Just to change your spending habit, because that's really when you are saving or you are struggling to save money it's because you aren't in control of your spending habit. Trudi: And so, this is about controlling it and we all like an incentive, we all like a reward, and sometimes having that incentive can help. Sarah: Absolutely. So, one of our first tips today is to separate your savings into a different account for a range of reasons. But one is so that you can make a physical transaction to a different account. Trudi: Yes. Sarah: The second one for me is that, so you can watch the balance change Trudi: The main one for me so that it's not in my ordinary everyday account. Sarah: So, you're not spending it? Trudi: I'm not spending it. I don't see it as money that is available to me. Sarah: I actually also find that it's easier for me personally, to save money if there's more money in there to start with. So, if I had a savings goal, I probably would wait until I had say a thousand dollars that I could pull and put into a saving account, and then I would dump a thousand dollars in and then I would start saving my $50 a week or a hundred dollars a week or whatever my, my budget allowed me to save. Trudi: Yeah. I also actually like to use an account that's with a different bank because then when I'm logging in to do my everyday banking, I'm not seeing it all the time Sarah: Correct, it’s gone. Trudi: It's gone. So, I don't sort of think about that money that I have sitting there. Sarah: Yeah. Front of mind, Trudi: Back in the day I used to use an ING account because it was a lot harder to access your money and you had to transfer; Sarah: Couldn’t get the money out of that. Trudi: Had to transfer it back to your normal savings. Sarah: You had to do that before 4:00 PM and then somebody came in an actual human came in the back end at 9:00 AM the next day. And they did the actual interbank transfer for you. So, it wasn't instant. You actually couldn't easily touch it. Trudi: These days most things are instance, but having a different bank still at least provides that little bit of separation so that you're not seeing it. And thinking about it all the time. Sarah: Yeah, absolutely. Trudi: Automatic transfers are also another favorite of mine. The day that you get paid, have your bank just set up to have an automatic transfer into that other account Sarah: Or even better get your employer to split your pay. Trudi: Yes. That's an even better option because then you're really not even seeing or thinking about that money coming in. And it's really about making it as simple as possible for you. If you're not having to put thought and effort into setting aside that money, then it makes that savings process a lot easier. Sarah: Absolutely. So, we could talk about this for days of all the little automatic transfer tips or apps that you can use that round up, like your acorns, which is now called rays, or there's always a different new app that can do some of this stuff, but it's about the psychology behind the why you do it. And if you don't understand why, you spend your money and what your impetus is for spending, an app's not necessarily going to help you control your spending habit. Trudi: That's right. Sarah: So maybe you need to look at ways to reduce your spending naturally, rather than trying to get past the buck, "pun intended" of responsibility for the savings in the first place by getting an app or an automatic transfer to do it. So, how do you reduce your spending, Trudy? Trudi: Have a look at what I'm actually spending my money on is sort of the first Sarah: Actually, read your bank statement. So Trudi: Actually, read your bank statement and a lot of the banking apps these days actually have some additional tools that'll help you break it down a little bit into; Sarah: Spend trackers. Trudi: Spend trackers, is it food that you're spending money on? Is it clothing? Is it just like household bills? Where is the money going in those various categories? And the first thing that I would always cut back on is I guess, your discretionary spending, you know, your Uber Eats. Sarah: So just to highlight for everybody when we're talking discretionary spending: discretionary spending is things that you want, but you don't need. Basic spending is things that you need, like clothes, basic food and accommodation, a roof over your head and shoes on your feet and transport might not be a car, but it might be transport. Trudi: And look, to be honest, if I look at things that I've bought through an app, a lot of that is probably discretionary spending. So, it's Uber Eats, it's a shopping app that maybe I've gone through, a great way is to have a look at what have you been spending on via PayPal. Sarah: Buying handbags. Trudi: Because most of those things would be goods that you have purchased online and there would be an element to that that is discretionary. So that would be a great way to sort of have a look at where you need to cut your spending a little bit. But even just things like your grocery bill, I know that the cost of food is going up at the moment. And lots of people are noticing that, but by the same token, have a look at what you're buying within your weekly shop. Is it just your necessarily weekly food? or are you regularly also adding some things in there that are? Sarah: Don't go to the supermarket when you're hungry. Trudi: Yeah. Sarah: Look, I think as well, the cost of food is going up, so maybe it's, you need to stop shopping at the supermarket and you need to plan your week a little bit better so you can get to a farmer's market. Trudi: Yes. And it's going to be different for different people as to what's going to work and what's going to Sue, but there are different places to buy your food, different places to buy any sort of product from. So, make sure you are shopping around and having a look and making sure that you're getting the best deals for the products that you do need to buy and Sarah: Also, location-based, like certain suburbs or cities versus regionally. Like if you're buying stuff from an inner-city, say Truackie Melbourne, for example, or an Eastern inner-city Sydney suburb like pots point, it's fair to say because the cost of living is higher in that suburb. The cost of what you're spending will be higher in those suburbs. So maybe you just need to have a look at where you spend your money and do you need to plan your weekend your week or your weekend out a little bit better so that you are spreading your spending across a range of cost bases. So that it's not costing you as much as if you just stayed in one suburb or location. Trudi: Yeah. Well, there's a service station near me that is well known as having petrol it's a bit cheaper or is always the last one to put their prices up: Sarah: Prices up. Yeah. Trudi: So sometimes it's worth going. It's only a small way out of my way to go to that petrol station to get the savings on that: Sarah: Got to leave five minutes earlier. But know that's what you are doing, so you do leave five minutes earlier. Trudi: Or even little things like if you're a Costco member, often their petrol's a bit cheaper. So, take advantage of those discounts that you might already have available to you. Sarah: Costco your way, you can buy everything in bulk, but every time you go into the store, you spend $500. Trudi: I'm getting better. Sarah: It's like that at Audis for me too. So, where I'm living now, I know that we support local way of possible, but the cost of food here is so much higher than it is in Melbourne Bread capsicums are at $15. Trudi: Wow. Sarah: Right. So, I try and buy my fruit and vegetable from the farmer's market and then only buy like the other basic sort of food, grocery pantry items I need from the supermarket. And then once a fortnight or once a month, I will do a trip and go to one of the larger regional centers and go to Audis, or sometimes Safeway there it's a little bit cheaper than, than the local supermarket here, which I do support regularly. But if I'm doing a bigger shop, I need to buy Trudi: And just cut back on some things Sarah: Stock up and get it down as cheap as possible because the cost of food is actually more expensive here than what it was in Melbourne. Trudi: And look, if you do have the ability to buy in bulk, then that often can save you money as well. I just recognize that not everybody has that Sarah: Absolutely. And some people live week to week and that's okay as well. So, we shop around for your big expenses. So those big things that you pay yearly, which is registration, you can't usually change the price on, but the insurance on the car, you can. Trudi: You can. Sarah: And we've already mentioned the fuel. We've talked about utilities, does the utilities connect on Saraheifermann.com or on SFA loans.com.au that you can go in and just drop your bills straight into it. And they will compare for you. I engage this service to offer it as a service to my clients and listeners, they'll compare your bill for you and do all the background work. So, none of this bill compare scenario where you have to do all the legwork, it does it all for you. I mean, I save 25 bucks off my electricity bill, straight away by doing that. And 25 bucks doesn't sound like a lot, but 25 bucks over one bill for the year is $300. But if it's across five bills, that's $1,500. Like this stuff adds up. Trudi: It sure does. The one that I see on phones is that people have bought a phone with their plan, but the plans run out and they haven't gone back to renew the plan, but they're still running on this expensive plan where potentially they could have just be downgrading the plan because they've already got a phone to bring your own phone plan, that's a lot cheaper. Sarah: Yeah. Trudi: So, that's often a great way that you can save some money if you already own a new phone. That right? Sarah: Yeah. Break down the big savings goals into smaller chunks. So, this is definitely a me. Trudi: Well, if you say to someone you need to go and save $50,000, so you could buy a house. I think most people would just go, what, how that's impossible. It's not going to happen. Whereas if you break it down to this year, I need to save $5,000 to put towards my house deposit. That's going to happen in a few years down the track that then becomes a bit more of a manageable and achievable goal. Sarah: Yeah, absolutely. That's the only way I can do it personally. In fact, I need it braking down quarterly. What's the goal that I need to have between July and September, by September 30th I need to have this much into that account. Trudi: Yeah. Sarah: Yes. That's what has to work for me. Trudi: Break it down as much as you need. Maybe it is a weekly or a monthly goal. That makes more sense for you to break it down and to achieve these things. Sarah: Maybe first you to pay down your debts though so that you can save without the guilt of the debt repayment being there. So maybe you need to make more than the minimum repayment or you need to pay it in, a faster frequency. So rather than paying it monthly, you should be paying it weekly or fortnightly because that actually does make a difference on the interest calculated. Trudi: Absolutely does. Sarah: You pay things off faster. And if you are not paying your home loan specifically weekly or fortnightly, that is the one takeaway you need to do right now is to go and get that resolved with your lender, is pay your loan, and on a decent frequency that's not bad. Trudi: Yeah, it does make a big difference at the end of the day as to how much you paying off each year and how quickly you can pay that loan off Sarah: And pay off your smaller loans. All those that have got the highest interest first and put decent chunks into them, because they're just costing you money. Trudi: And I like paying the small ones off first because you get that sense of Sarah: It's done. Trudi: Yes. I've achieved something and I've gotten one out of the way and doing that makes you feel good and more willing to move on to the next one. Sarah: Yeah, absolutely. So, we also have record your expenses. Trudi: If you don't know what you're spending your money on, how can you make any changes to make sure that you are saving money, Sarah: Budget for savings. Trudi: Well, yeah, it's got to go in the budget if I don't. Sarah: So you don’t know what your expenses are you can't budget. Trudi: Yeah. And if I don't know how much that I need to save, well then how can I make a plan of how I need to put away each month, or week, or fortnight? Sarah: And you can't save, if you don’t know what the gap is between what your current expenses are or your cash that you're spending and what you want to budget to meet your goals. Trudi: Well, yeah, exactly. Right. You can't save any money if you're spending a hundred dollars a week and you're earning a hundred dollars a week. Sarah: So, if the gap between is negative, you've got no money savings. Like it's a very simple math’s equation. Trudi: Yeah. Sarah: And we should point out here that our money intelligence course is available in Saraheifermann.com.au and it specifically talks to these things and teaches you how to do them. So, if you're listening to us going, I don't know how to do that. Go and do the course. Just go and do the course. It's the best 150 bucks, 169 [unclear 14:35] you'll ever do. Trudi: Yeah. Really got to do It. Sarah: And if you're in business doing that course will be foundational to you understanding your business expenses as well. Trudi: Yeah, it will. Sarah: So, if you do know what the gap is, and it's not enough, you need to find ways to cut your spending Trudi: Or to earn more money. Sarah: Which is easier. No, both can be complicated, right? Trudi: Both can be complicated but don't discount the earning more money thing. Maybe it's time that you went and ask for that pay rise. Maybe it's the kick in the but you need to leave the job you don't really enjoy and to go and get one that actually pays more, Sarah: Maybe it's time to stop scrolling your phone after hours and maybe pick up some part-time work or some casual work to earn some extra money and be a bit more productive if you're in a position to do so. Trudi: Or as a family, encourage your spouse to pick up some more work. If they're not working or working limited hours. There are lots of different options as a family that you can make decisions about. Sarah: Coming down to really what your priorities are. As an individual or as a family, and then picking the right tools to help you achieve the outcomes. Trudi: And there are lots of different options available that are going to suit different circumstances, different individuals, different families. Sarah: And it's about changing the habits around it. So, it becomes automatic. Now whether that automation is you doing the automation in the decision-making process, or whether it's automation via direct debits or direct transfers or an app that does it for you, or whatever that looks like. But when you decide on what the priority is, the rest of the stuff falls into line. Trudi: Yes. Sarah: And then what happens? Trudi: Your savings will grow. Sarah: You get to watch your savings grow. And I think we all can agree that we all like that. Trudi: And one important tip that we haven't actually touched on is that while you're watching your savings grow, don't put them in a zero-interest bank account. Put them in an account. That's actually going to earn you some money. So that, that savings is still working for you and growing all other time. Sarah: There's not much available in terms of interest-bearing accounts at the moment. But if you do a little bit of research, you will find that out, that there are some better than perhaps the bank that you're with, and it's something that you absolutely should consider. Trudi: And, and look, if it's a longer-term goal, maybe there are some other investment options that you can look at as well to put the money into the short term until you meet that savings goal. Sarah: Absolutely. I'd love to hear what your tips are. What's work for you. What was the game-changer for you? Because there might have been something you came across that really just changed your life when it came to savings. Trudi: Yeah. We'd really love to know so that we can share it with everyone else and help people improve their savings. Sarah: Let us know because next week we're talking about investing money. Trudi: Great topic. Sarah: Got to have money to invest it. Trudi: Exactly. Right. Sarah: See you all next week. Trudi: Thanks, everyone. Bye. Sarah: Bye.———————-
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