Your year of saving cleverly
LOW household savings are a real source of financial stress, yet it’s possible to grow a pool of cash without having to sell a body part or scrimp on lifestyle.
Let’s take a look at five ways to save more than $5000 in 2019.
Pay less than 4 per cent on your home loan
The average home loan is worth $386,000 — a big chunk of money, so there’s plenty of scope to save. Not so long ago, if your mortgage interest rate didn’t start with a ‘4’ you were paying too much. But shop around and you’ll find smaller lenders like Move Bank (3.59 per cent) and Reduce Home Loans (3.44 per cent) are charging even less.
The thing is, homeowners are still paying an average rate of 4.65 per cent. Yes, refinancing can come with costs but here’s a chance to cut close to 1 per cent off your loan rate, potentially saving around $3860 in interest this year alone. Clear the credit card Australians owe an average of $3220 per credit card. The scary thing is, plenty of us have more than one card, and even among what the Reserve Bank describes as ‘low rate’ cards, the rate is typically 13 per cent. Aim to pay off your card in 2019 — on a debt of $3200 you could pocket interest savings of $400. Use unit pricing Consumer group Choice estimates we could save $1600 on groceries in a 12month period just by looking at unit prices. You’ll find these displayed on supermarket shelves just below the ticketed price. It’s an easy way to see which products really offer the best value.
Drop your biggest money waster
We all tend to have at least one habit that sees us waste valuable cash. Even something healthy like buying a bottle of water each day can set you back about $700 annually.
Think of just one habit you could drop to boost your savings. Cut investment costs I’m a big fan of investing. However, I’m not so keen on paying more than necessary to keep my money working hard. Canstar research found the annual fee on a ‘balanced’ investment fund can be up to 2.42 per cent. It’s possible to pay far less.
For instance, InvestSMART’s fee on a balanced portfolio is 0.99 per cent annually capped at $451. That’s a fee saving of almost $150 on a $10,000 investment. Paul Clitheroe is chairman of InvestSMART, chairman of the Australian Government Financial Literacy Board and chief commentator for Money Magazine.