Five secrets to savings success

Put yourself first

Each pay day making a payment into your own savings account needs to be the first thing you do – not something that happens if, by chance, you have any spare pennies left at the end of the month. The smart thing to do is to set up an automatic transfer that happens as soon as you get paid.

Cash up

Once you’ve paid your savings to yourself and allowed for any other fixed bills and online payments, buy all your basic household necessities and then withdraw the remaining money from your account. Allocate the remaining cash for luxuries such as dining out, clothes and shopping and use it wisely – once it’s all gone, it’s gone.

Establish needs from wants

Any time you consider buying anything, question it. Ask yourself whether you really need it, or whether you really want to save. This doesn’t just apply to big ticket items – it’s wise to start questioning every item, right down to the choice of bread you buy.

You can start the 30-day rule, where if you have the urge to buy something new you force yourself to hold off for 30 days. If, after a month, you still ‘need’ to splurge, then go for it – but chances are you’ll be over it!

Identify spending patterns

Start using a spend-tracker app or even just start recording all of your spending in a little notebook – the catch is you need to record every penny that leaves your hands! After a month of tracking your outgoings, categorise your spending and evaluate the return on investment. For example a $4 coffee can seem great at the time, but when you realise it adds up to $120 over a month it might not seem worth it. Once you have a feel for where you are happy to see your money go (and what feels like a waste) use these insights to help inform your budget and day-to-day spending.

Play mind games

You have to want to save. So set a goal and keep it in your head. Write your goal out (or find a suitable picture) and make this your computer or phone screen saver – that way it will be front and centre all day! Set up your own savings incentives. For example, allocating a percentage of your savings as spending each month, or agreeing to transfer the cost of your coffee into your savings every time you weaken and splurge at the local café.

For more tactics on how to make your finances really work for you get in touch with your local Prosper adviser.