Basic Rules for Saving

Basic Rules for Saving

Don’t know where to start?
Here are some basic guidelines to follow when saving:


Pay down higher-interest debt first

If you’ll be paying more in interest than you’ll earn with a savings plan, it makes sense to pay the debt before you start saving. The habit of regularly paying down debt can then be used once the debt is cleared to regularly contribute to a savings plan.


You come first

We all are tempted to live beyond our financial means. Pay yourself first by setting up a regular contribution to your savings plan. The amount you save and the frequency are totally dependent on your circumstances, but even small contributions made each month will grow. The greater value is the beginning of a habit.


Start early

Nothing helps your savings grow quite like time. The earlier you start saving, the more time your money has to grow and benefit from compound interest and growth. This also means smaller savings can have bigger compounding effects.


Use tax advantages

Take advantage of the tax benefits the government offers to encourage saving. Spouse contributions to low-income spouses and low tax rates on Extra super contributions, Saving your first home deposit inside your super, or taking greater control of your retirement planning with a SMSF, all means you can get further ahead on your savings goals. Stay connected to your financial adviser to stay in the loop.


Work with an expert

Working with an advisor is proven to help save you more money over time and they’ll help build a plan that fits your needs and support you through managing greater self control in uncertain times.


Manage your Unexpected Wealth events

Inheritances, Redundancy, Financial Windfalls, or Insurance Payouts are all financial events that can also bring with them powerful and isolating emotional responses.
Most people are unprepared (or simply inexperienced) with managing surprise wealth and its accompanying life transitions.
Many mistakenly try to recreate their past environment pre-unexpected wealth, with many soon losing their new wealth and its opportunities. The result can leave many dealing with feelings of shame, regret, and secretive misery — feelings often unfathomable to others. Always reach out to a financial professional to support you through this major life transition event.

race runners at the start line

Savings 101 — Saving as learning to invest

All savings (where there is a chance of receiving interest as a return on your money) is a form of low-level investing. Whether that's getting 1% interest on a term deposit, 3% return on your Superannuation Fund, or 7% on a private loan, investing-to-save and saving-to-invest are important interchangeable terms to get to know.

The ways to save and reach your financial goals are as varied and flexible as the people saving for them.

  • So before you consider the how first check in on your motivation to why.
  • Then check your timeline, and decide whether that's fixed or more fuzzie?
  • Savings for children's education and weddings using a long term Insurance Savings Bond might be a future reality to plan for, but exactly when that might be, can be very different from saving to set up your own emergency fund.

Learning to save involves many additional skills and benefits and is a valuable life skill set we need to teach and pass on to our children too. Modeling financial skills and learning how to better talk about money matters is part of parenting and learning to successfully navigate your own financial world.

And when it comes to adult children, being able to understand adult financial concepts like the reasons behind using a documented family loan agreement are important life lessons to be learned early.

Time for a Different Approach

Many financial advisors suggest that by age 40, you should have twice your annual salary saved for retirement.

There are good reasons for this number, but for many people, it seems absurdly out of reach. Figuring out how to save money is a complicated topic. Retirement is expensive, and it can include significant medical costs. How to budget can be an even bigger challenge, especially in a troubled economy in which many people have lost their jobs or been forced to face rising interest rates, and therefore rising rental payments too.

The reality is that many people won’t save as much as advised, as quickly as advised so we need to look at incremental and automatic strategies that make this easier.

Financial Fact: About 30% of Australian households led by people age 45 and older, claim to have no retirement savings outside the balance in their default Superannuation fund. Many of these same people are expecting to retire with mortgage or credit card debts still to be paid.

  • There’s a savings shortage in Australia, and at times, the gap between where one should be and where one actually is can seem enormous.
  • One thing to be aware of is that time is one of the most important pieces in your savings plan. Start now — and start small if you have to.

Whether that's maxing out your additional superannuation contributions, rounding up all debt repayments to the nearest one hundred (or one thousand dollars), or using an Insurance Savings Bond as a long-term saving plan to supplement your superannuation – as soon as you start saving, you will soon be watching your savings grow.

Pro Tip: If you're saving for a specific goal, why not consider using a separate 100% offset account on your mortgage, so you can reduce your interest debt, while you save for a longer-term goal? If you're saving for your first home, consider whether the government's First Home Saver Scheme is appropriate for you. If you've decided home ownership is not for you, consider replacing that goal with one that involves significant savings-to-invest.

3 Steps to Smart Saving 101

Why should you Save?

How we can help

Having a strategy for your savings is an important part of providing for yourself and your family into retirement while reducing the pressure on your business as the sole source of your future retirement funding too.

Contact us for a confidential chat about your needs.

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