Savings strategies

S

sfulop

Hi guys,

Was just curious of the savings strategies people have used / are using to fund their first (or other) property ?

Currently, I set a figure that I want to achieve by X date, and work out a weekly target that I need to save to reach it. I then draw up an excel spreadsheet with the date of payment, amount, overall amount etc. This goes on my desk so I see it whenever I am at my computer. Basically, every week when I deposit the money I highlight the goal for the week as being achieved. There's no doubt it certainly adds up over time - it's just about being consistent, disciplined and saving every $ you can.

Be interesting to hear the stories.

Regards,
Steve
 
I made both of my kids save half of their income from the time they started part-time work. They were not allowed access to it until 18, for Lil & a bit older for the older one. Neither of them liked this at all. In fact I often got a screaming match from them because they wanted to just fritter it away in such neccessary pursuits as junk food, clothing (teen girls need clothing EVERY week:rolleyes:), movies etc.

It wasn't until they were older that they appreciated this, as they both left home with a nice lump sum. It is appreciated much more because THEY saved it themselves whilst their peers, who mostly got lots more money given to them (Youth Allowance) for doing nothing still have nothing.

Pay yourself first, just like any other bill. Set an amount and that gets credited to the account of your choice automatically out of your pay each pay period. What you don't get, you don't miss. What you have left over is yours to enjoy. Of course, that doesn't mean that you can't save some of that too, if you wish.
 
I set up an automatic deposit into a managed fund when i was saving for my first IP.

You could do say 200, 400, 800 a month into a fund depending on your income and after a couple of months I guarantee you wouldn't even miss it. Have the dividends reinvested, live a little bit 'thrifty' and try not to spend all of the remainder of your income.
 
Hi,

We do not have saving targets. Living on 1.5 person income with one 8 month old, coming from a country with no pension and its citizens having to save / invest for their own retirement, we tend to live frugal lives. Saving / investing is simply a necessary part of life for us. Of course, having low interest rates and tax rates back in the home country helps.

It seems we have internalised the frugal / thrift mindset and lifestyle to a point where we would spend $120 a week on food for the whole family, and put everything else where possible on the credit card to track other expenditure. If on one month we hit a high on our card expense, we compensate with less luxuries for the next month.

Still manage to put away a little over $1K per month after interest payments.

Regards

Daniel Lee
 
We're just going to work out loosely what the payments will be for the next house - if they ever tell us what it will cost - and put that amount into one of the existing loans regularly each fortnight for 6 months, as a backup means of proving serviceability.

Excess funds we'll just randomly throw in the same loan, but we really need that regular topup. We only *need* to save about $4000 but are aiming for $15k.
 
skater said:
Pay yourself first, just like any other bill. Set an amount and that gets credited to the account of your choice automatically out of your pay each pay period. What you don't get, you don't miss.
Click to expand...

This is also what I do. I've worked out a set amount I can afford to put aside each month, and that gets paid first out of my pay.
 
did it before and still doing it

I think the excel stuff worked great for me. Instead of having a savings goal what i did was calculated 3 scenarios based on max spending, average spending and absolute minimum spending. this breaks down to costs for every single detail and each actual expense gets commented with the amount and reason.
Then made a break down of the quarterly, biannual and yearly expenses (car regos, car servicing, electricity, gardeners bill etc) into monthly intervals and add it to the monthly scenarios ( even included my antivirus subscription in this :D).
This gave me a rough estimate about how much potential savings i would have based on the three scenarios.

Then worked on saving more based on the average spending scenario. So every month when i spent less than the average spending budget, my final balance kept increasing which keeps you motivated to do more.
 
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We figure how much we need to live off for the fortnight (just food and activities) and the rest all goes straight onto the mortgage as an automatic debit. Bills get paid direct from the mortgage as they come in, and unexpected expenses too. It's funny, because I am always thinking we are broke, and being careful to make sure the money strches far enough, because I keep on forgetting that we are paying more then double on the mortgage and actually have a fair chunk in the redraw.

(And if I had of known better way back when, this would all be in an offet account rather then on the actual mortgage. But oh well, We have already screwed up any possible deductibility on this place, so have resigned ourselve to simply paying it off completely - or close to - prior to upgrading.)
 
When saving for our first house, my wife and I opened a joint savings account and decided on how much we could put into the account per fortnight. Having two of you saving towards the joint goal reduces the temptation to 'dip in' to the savings. My wife would have been very annoyed if I used the savings on a new set of golf clubs!

If you have your goal and you stick to your plans, you'll be fine. The motivator for me was seeing the savings increase, realising we were getting closer to our goal.
 
I am one of 15 and my dad was an engineer running how own company whilest working a second job. I knew the value of money from a young age. I have never spent excessively.

I think i save each week about 200 if i can. Then i pay off extra off my bills to overcompensate and i always pay an extra up to 50 a week on loand of any sort. Its easy savings.
 
yeah you have to pay yourself first, into an account you don't easily have access to.

ie set up a high yielding account saver with no internet access and no card access.
 
I find it quite easy to save for some reason.

This is how I do it. I have my day to day account and a high yield savings account set up so I can both view them online. I have also set up an automatic transfer so that every pay cycle, a portion of my pay (about 40%) is transferred from my day to day account into the savings account. Once it's in there, even though I can access it online, which I prefer, I don't touch it. I just pretend I never had the money to begin with.

At the end of the fortnightly pay cycle, if I have any money left in my day to day account, I will transfer this across to my savings account, and start fresh again for the next pay cycle. I also work as a research assistant, and all the money that I earn from this job goes straight into my savings account.
 
Spend only 30% of your income and save 70%.

Life starts out tough, but over time the compounded effect of the savings really kick in.
Over the last several years my expenditure is becoming quite enjoyable, and the best part, it can sustainably increase into the future.

What can i say, life is now good.
 
We don't earn enough to do 30/70. 50/50 is doable though. It'll be different when we rent this house out and are overall positively geared with no PPoR *or* IP expenses out of pocket, but that is some months off and out of our control.

The irritating thing is I'd wager we fail bank servicability because they assume we are spending 110% of our income, but they forget how cheap kids are if you don't have them in childcare or dress them in Gucci. Babies are virtually free - they cost a box of nappies every fortnight - and toddlers just cost a few bites of food each day. Toss em some new clothes every few months and they are set. I'm sure there's some other expenses involved too but its been so long now I've tuned them out. Toilet paper is probably one of them - it lasts a lot longer when the biggest offspring isn't here :)
 
We have used these 2 methods which have worked well:

Spend less than you earn.
Earn more than you spend.

The latter was much easier to do and has no fixed limits.
 
Have a rough plan in advance of what you want to buy before you need to - say over the next year. Then make opportunistic buys when you find them on sale etc. Kind of like the Buying Zone applied to consumerables. By paying less on your purchases, you will have more to save.

Also buy if prices are temporarily low (e.g. in season fruits and veges). Investing analogy is dollar cost averaging.
 
LisaP said:
I find it quite easy to save for some reason.

This is how I do it. I have my day to day account and a high yield savings account set up so I can both view them online. I have also set up an automatic transfer so that every pay cycle, a portion of my pay (about 40%) is transferred from my day to day account into the savings account. Once it's in there, even though I can access it online, which I prefer, I don't touch it. I just pretend I never had the money to begin with.

At the end of the fortnightly pay cycle, if I have any money left in my day to day account, I will transfer this across to my savings account, and start fresh again for the next pay cycle. I also work as a research assistant, and all the money that I earn from this job goes straight into my savings account.
Click to expand...


I do something very similar. Each fortnight $xxxx of my pay goes into one of my offset accounts and I never touch it.
At the end of every month, I pay my loan interest from my 'daily' account where the remainder of my pay and all my rents go. I maintain a minimum $10k balance in the daily account, so after the loans are paid on the 30th/31st, I sweep anything beyond the $10k into the offset account. Amazing how fast the balance can go up and I never miss it..

Its all about habits, discipline and paying yourself first..
 
I'd be pretty close to IV's 30/70 rule.
70% on investing, 30% on living expenses (car, food, entertainment).
I have a highly geared portfolio tho so its more forced, probably not something to envy lol.

Regards,

RH
 
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