Despite popular expressions telling us to “live every day like it’s your last”, the reality is that looking back, many people probably wish they had prepared more for their financial future.
A recent UK survey asked 1,500 adults of all ages what they would do differently if they could relive their lives. “Save more money” was the most common response, with 35 per cent saying that failing to do so was their biggest regret.
Similarly, in the United States, “not saving enough for retirement” was a more common regret than not doing better with careers and personal relationships, according to American Century’s study of 2,031 workers.
These surveys suggest that for many, a touch more frugality in earlier years would have gone a long way. Perhaps the expression should be changed to “live everyday like it’s your last, but save money and plan for your future in case it isn’t” – doesn’t quite have the same ring to it though.
If you feel like 2016 is the year you get better control of your finances and start saving for your future, here are some money resolutions you can consider to help you get going.
Spend on what gives your life more meaning
Why spend $3,000 on a leather sofa when for that same amount you could have an adventurous holiday? In your dying days, you’d cherish the memories of that holiday more than the memories of sitting on that couch.
Also, certain things should take priority. It’s nice to treat yourself with a flashy car when you can afford it, but things like having enough money to raise a family in a beautiful safe neighbourhood are more important.
Consider a bonus savings account
Albert Einstein once said “Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn’t … pays it.”
If one of the smartest people to have ever walked this planet was spruiking the benefits of saving, perhaps it is something you should do more of!
Although interest rates are currently at a dismal low of 2.5% (as at December 2015), it’s still worthwhile to have some of your spare/emergency cash in an incentive saver account earning some interest instead of none. Providers are offering as much as 3.5% in interest on these bonus savings accounts, which would pay around $350 a year on $10,000 in savings. So simply by keeping your money in a high interest savings account instead of in a 0.01% transaction account, you could be a few hundred dollars richer each year. You can compare savings accounts here.
Review your banking and insurance policies
Just as you would when shopping around for particular products or services (e.g. electronic devices, furniture, car repairs), you should regularly do a comparison on your banking products and insurance policies to ensure you’re getting the best value.
Canstar compares and rates a range of banking products (e.g. loans, credit cards, bank accounts) and travel insurance policies in New Zealand on your behalf. Have a look:
Refinance your mortgage
The home loan market in Australia is highly competitive and there is significant difference between the highest and lowest interest rates on offer.
Currently, the lowest variable interest rate for home loans on the Canstar database is 3.85% while the highest is just over 6%. The table below can give you an indication of how much you could potentially save on your home loan by negotiating just a 1% rate cut. The figures are based on a home loan over 25 years.
|Size of loan||Difference in monthly repayment|
Based on the difference between a 5.5% and 4.5% rate over 25 years.
More smart-money techniques
There are plenty more resources on this website to help you manage your money better and prepare for your financial future.
Still feel like you can’t control your spending to leave enough for savings? Read this easy step-by-step guide on how to write a budget.
Finally, for a comprehensive list of easy tips to help build up your savings, check out these 30 ways to save money.