Change SPEND­ING HABITS AND SAVE

ME - - Finance -

net close to $7050 over five years. If you usu­ally drink two cof­fees a day, this fig­ure will be closer to $14 120 — a sub­stan­tial sum in any­one’s book.

• • • Mr Lar­ber en­cour­aged par­ents to teach their chil­dren, from a young age, how to man­age money and pre­pare them for the financial chal­lenges of adult­hood.

• “In a time of credit cards, in­ter­net bank­ing and on­line shop­ping, chil­dren don’t of­ten see peo­ple buy­ing prod­ucts with phys­i­cal money like notes and coins,” Mr Lar­ber said.

• “Not see­ing money ex­changed for pur­chases makes it harder for kids to get their heads around what things cost. “Giv­ing kids pocket money is also a great op­por­tu­nity to teach chil­dren the value of money and help them un­der­stand about sav­ing, spend­ing and do­nat­ing.”

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www.moneys­mart.gov.au ud­get­ing is the most ef­fec­tive way of man­ag­ing your money and en­sur­ing that you spend less than you earn, but pre­par­ing a bud­get and stick­ing to it can be eas­ier said than done. Aus­tralian Se­cu­ri­ties and In­vest­ments Com­mis­sion MoneyS­mart web­site of­fers prac­ti­cal tips, easy-to-fol­low ad­vice and sim­ple strate­gies to help you save money. ASIC MoneyS­mart se­nior ex­ec­u­tive leader Miles Lar­ber said set­ting sav­ings goals could be ex­cit­ing, and once a reg­u­lar sav­ings plan was started it could be sur­pris­ing how much could be achieved. Mr Lar­ber said what­ever the cir­cum­stances, it was never too early to start sav­ing, no mat­ter how small the amount that could be put aside. He en­cour­aged peo­ple to “pay them­selves first” by hav­ing sav­ings de­ducted from their pay or ben­e­fits, and to keep a sep­a­rate sav­ings ac­count, prefer­ably with a com­pet­i­tive in­ter­est rate and no ATM or EFTPOS ac­cess, to pre­vent them from dip­ping into it when they’re tempted by an im­pulse pur­chase. “Add in your wind­falls, try to save any pay rises, bonuses or tax re­funds,” Mr Lar­ber said. He said small changes could make a big dif­fer­ence to a per­son’s bank bal­ance, and by chang­ing one thing they did reg­u­larly, they could save money. Mr Lar­ber sug­gested: Give up drink­ing cof­fee or cut down on al­co­hol — it might sound scary but it will save you money and can have health ben­e­fits; Make your lunch at home; Have peo­ple over for din­ner rather than go­ing out, and ask ev­ery­one to bring a plate of food to share; Bor­row books and DVDs from the li­brary; Lock-up your credit card for a month and only pay for things with cash; Set a limit for birth­day and Christ­mas presents or give home­made gifts. “Not many peo­ple con­sider how much small pur­chases can add up over the longterm. Take, for ex­am­ple, a cup of cof­fee; many peo­ple pur­chase one a day, and some buy two or more,” Mr Lar­ber said. “If we as­sume the av­er­age price for a cup is around $3.50, this adds up to an an­nual cost of close to $1280 or an eye-wa­ter­ing $2560 if you choose to buy two. “A daily de­posit of $3.50 with in­ter­est com­pounded monthly at 4 per cent will

B “Take the time to con­sider other seem­ingly small, fre­quent pur­chases such as choco­late, gum, or bot­tled wa­ter and you will soon re­alise this can lead to big sav­ings in the long term.”

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