20 Practical Ways to Save Money This Year

With Australia’s cost of living steadily on the rise¹, the art of saving money is more important than ever. But how exactly are you meant to build up some extra funds amidst all the growing expenses? Well, we’ll do what we can to help with some quick tips for 2022 and beyond.

Tip 1: Keep money in a savings account

Since most savings accounts don’t have a debit card attached, it’s much harder to make impulse purchases with them. As such, putting your money into a savings account may help you to save more – just make sure you have enough in your transaction account to cover the daily essentials.

Tip 2: Go for cash over cards

According to Drazen Prelec, a Professor of Management Science and Economics at the MIT Sloan School of Management, people tend to spend more money with credit cards than they do with cash². They also tend to make more impulse purchases.

For this reason, it’sit may be better to leave your cards alone whenever you can. Though, if you do use cash, just make sure to wash your hands afterwards. With COVID-19 still around, it pays to be a little bit cautious.

Tip 3: Pay off your credit cards each month

Credit cards can be awesome, especially when you want to buy that brand new iPhone or Smart TV you don’t have the cash for. But it’s for this very reason that credit cards can also be dangerous.

Most credit cards rack up interest, and over the months this could cost you more in hundreds, or even thousands, than you’d otherwise pay. That’s why it is generally recommended to pay off the card in full every month before the due date on your monthly statement in order to avoid any late fees.

Tip 4: Say goodbye to debt

Aside from your credit card, you may want to consider reducing your other debts whenever possible. This can especially be true for debts that accrue interest, such as home loans or personal loans.

Generally speaking, the faster you pay off such loans the less you’ll have to pay in interest over the long-term. So you’d essentially be paying off more immediately to save more in the future. However, it’s also important to check the terms and conditions of these loans, as some will have early exit or “break fees” if you pay them off before the loan term ends.

Tip 5: Ditch old subscriptions

Did you sign up for audible ages ago but still haven’t gotten through a backlog of a dozen audiobooks? Or maybe you signed up for a Netflix account you haven’t used in months? If so, it might be time to cancel one of these subscription services.

As noted by Moneysmart, you might also want to have a look through your old bank and credit card statements for anything that isn’t essential³. You could end up finding regular expenses that have slipped your mind – an old gym membership, perhaps. These can be easy expenses to drop if you no longer need them.

You don’t always have to completely cancel these subscriptions or membership services either. If you think you might use it again in the future, there may be an option to “pause” the service and resume it at a later time.

Tip 6: Make substitutions

As mentioned in our blog post on budgeting for a family, you don’t need to give up everything you love to save more money. Instead, you might need to make some trade-offs – switch out some expenses with a more affordable option. For instance:

• Instant coffee instead of a daily latte from the city cafe
• Buying clothes from an op shop instead of an upmarket department store
• Second-hand books instead of brand-new paperbacks

These kinds of simple changes can quickly add up to considerable savings in the long-term. So it’s worth looking at every area of your finances to see where these substitutions can be made.

Tip 7: Cut down on meat

For any meat-lovers out there, this is a tough ask. However, if you can cut down on the beef and seafood, your budget may thank you for it.

According to a 2018 study by Deakin University, the average family can save about $1800 by adhering to the Planetary Health Diet⁴. This diet still makes room for some meat products (namely chicken and fish), but recommends a much more modest amount compared to fruits, vegetables and whole grains⁵.

Scaling back your meat consumption just takes some small, practical changes. If you eat beef or lamb twice a week, you could always change it to a Monday-only thing. Or, you could just make the portions of meat smaller while piling on more veggies. Whatever works for you, so long as it helps you cut back! >/p>

Tip 8: Cook your own meals

There’s nothing like having a delicious meal delivered straight to your door. Unfortunately, all those takeaway costs can quickly add up.

It might be better, and cheaper, to stick to your own cooking. Having some quick-and-easy recipes in your arsenal can definitely help on this front too. Sesame stir fry, anyone?

Meal prepping is another good strategy to avoid the temptation of fast food. A lot of people like to use Sunday afternoons or evenings to prepare their meals for the week. It could make a lot of difference if you’ve got meals ready to go in the fridge or freezer – just chuck a ready-made meal in the oven or microwave when you can’t be bothered cooking after a long, busy day.

Tip 9: Get savvy with grocery shopping

Going from well-known labels to inexpensive “home brands” can be a great way to save money on your grocery bill. Or, if you’re not a fan, you might prefer to focus your shopping on items that are on special. If there’s a deep discount on items you regularly, it may even be worth buying in bulk – that way, you’ll have enough in stock until the next price drop.

However, you’ll always want to check the “price per unit” on whatever item you’re buying and try to get the most out of your money. Sometimes, an item that’s on sale will still cost more than another brand, so it’s definitely worth comparing

Tip 10: Kick unhealthy habits

If you’ve been wanting to give up smoking or alcohol for a while, now might be the best time to do so. It can help you kill two birds with one stone – freeing up more funds while taking care of those pesky vices.

Different strategies will work for different people too. For instance, some people gradually cut down on their vices, steadily reducing the amount they consume and increasing the time between consumption. According to the Department of Health⁶, most smokers try an opposite approach, quitting cold turkey and avoiding “triggers” that will make them want to smoke, such as going to the pub or hanging around smokers.

While effective, quitting cold turkey can also cause withdrawal symptoms, especially when it comes to substances such as alcohol. So if you’re considering this method, it’s best to consult a health professional first.

Tip 11: Set savings goals

Having something to strive for when you’re saving can really put you in the right mindset. Maybe it’s something as general as getting out of debt, or maybe you want to save up an extra $5,000 by the end of this year so you can finally take that trip to Paris. Whatever the reason, keeping a future reward in mind may help you to save whenever you feel like spending.

Just remember that it’s usually better to keep it simple. According to one study in the Journal of Marketing Research, a single savings goal can be more effective than multiple, competing savings goals⁷. For instance, trying to save up for a house deposit as well as a holiday may prove difficult; it’s often better to focus on the more important of the two.

Tip 12: Make yourself accountable

Telling people about your savings goals can also keep you on the right track. It’s easy enough to renege on a promise you’ve only made to yourself, but if you tell your best friend about that new car you’re saving up for and then fall short of that goal, well, you’re going to have a bit of an embarrassing conversation in the future…

It’s not a pleasant way to keep yourself motivated, but it can help. Heck, you don’t even have to involve other people. You can even set yourself a negative consequence for failing to meet your goal: going without a weekly treat or passing up on that purchase you wanted. Sometimes, pain really is the best teacher.

Tip 13: Sell what you don’t need

If you’re like most people, then chances are that you have some clutter lying around the house. Stuff that you don’t use but just haven’t gotten rid of.

Instead of simply throwing this stuff away, why not try selling it? You can offer it to a friend, hold a garage sale or sell it through an e-commerce website. Among other things, some items that might fetch a decent price include:

• Old clothing
• Books
• Jewellery
• Electronics
• Furniture

And while it might not give you a small fortune, at the very least you’ll have a bit more money in your wallet and a lot more space in your home.

Tip 14: Think about refinancing

It’s not unusual for a fair amount of someone’s income to go to their home loan and mortgage repayments when they have a house. And though this might seem like a fixed expense, refinancing may help reduce these expenses.

Refinancing simply means switching out your old home loan policy to a new one, typically with a new provider. People sometimes do this because the new home loan policy has a lower interest rate, meaning they might not need to pay as much over the life of their loan.

Of course, this is not a decision to be made hastily. And you should always check the other aspects of the new loan – including the comparison rate and any fees, as well as any exit fees with your current loan provider – before organising anything.

If you are interested, we can definitely help too. At iSelect, we’ve partnered with Lendi to make it easier to find a great deal on your home loan. Click here to get started comparing from a range of lenders online, or give Lendi a call on 1300 186 260.

Tip 15: Take a closer look at your car insurance policy

Like many drivers, chances are you’ve been with the same car insurer for years. But have your premiums decreased with your years of experience? Or are you still paying more or less the same amount that you were five years ago?

You might like to consider doing some car insurance window shopping, especially because the costs can significantly vary. Just remember to check the insurer’s Product Disclosure Statement to ensure you’re getting the right cover for your needs.

If you’d prefer not trawl endless websites, you can always compare a range of car insurance policies with iSelect online. That way, you can check out the different kinds of premiums and benefits on offer.

Tip 16: Shop around for health insurance

If you’ve got private health insurance, it might be worth taking a closer look at your policy to see if you could better tailor it to your health needs and budget.

Perhaps you’re paying for pregnancy when your baby-making days are well and truly behind you? Or maybe you’re paying for cataracts despite being decades away from retirement?

If you look closer at your health insurance policy, you might notice that you’re actually covered for a lot more than you really need, particularly when it comes to extras.

You could consider adjusting your excess level to reduce your annual premium or shop around and see what your other options are available with a different health fund. You could end up with a policy that’s either much cheaper, or better value for a similar price.

iSelect can also help on this front. With us, you can compare health insurance policies from a range of providers to help you find suitable and cost-efficient cover.

Tip 17: Find cheap entertainment

It helps to keep yourself distracted when you’re trying to avoid unnecessary expenses. If you spend the weekend going on nature walks or strumming a guitar you’re less likely to buy that new video game or make use of a streaming service.

Picking up inexpensive hobbies – drawing, gardening, music – can be one way to avoid the temptation to spend. Another is to replace big nights out with something cosier. Maybe you and your mates can enjoy a house party instead of going out. Trust us, you won’t miss the overpriced drinks.

Tip 18: Set a spending limit before you go out

When you need to go out to spend some money on groceries, gifts or recreation, it helps to set a spending limit in advance. This is another one of those things that seems obvious, but it’s actually really easy to get carried away on those big days (or nights!) out.

So set yourself a limit and don’t spend anything beyond that, barring an emergency. Doing so can also help in the long-term when you’re making a budget, but it’s worth trying on a smaller scale first.

Tip 19: Try your hand at homemade gifts

It’s the thought that counts, right? The next time a friend’s birthday rolls around, why not create something yourself instead of spending heaps on an expensive gift? I know, it sounds cheap, but done right it can make for something both heartfelt and memorable.

A collage with your photos is a classic way to go about it, but don’t be afraid to draw on your talents in other areas. Anyone who can paint, knit or make jewellery has a skill that they can use to create something wonderful for their loved ones.

Tip 20: Reconsider your gas and electricity use

A lot of us just pay our energy bills without even looking at them (thanks, direct debit), but if you take the time to see how much you’re actually using each month or quarter, you could find that you’re not necessarily getting a competitive deal.

There are simple things you could do around the house, like using hot water instead of cold for your washing, choosing energy-efficient light bulbs, and turning off powerpoints when you aren’t using them.

And while reducing how much energy you use is a good idea, also look to reduce how much you pay by comparing how your current energy plans stacks up against other offers. You can compare plans from a range of providers with iSelect to find one that suits your lifestyle and budget. Get started now!

¹ Source:https://www.abs.gov.au/statistics/economy/price-indexes-and-inflation/consumer-price-index-australia/mar-2022

² Source:https://mitsloan.mit.edu/experts/how-credit-cards-activate-reward-center-our-brains-and-drive-spending

³ Source:https://moneysmart.gov.au/saving/simple-ways-to-save-money

⁴ Source:https://www.deakin.edu.au/about-deakin/news-and-media-releases/articles/sustainable-eating-is-healthy-for-us-and-the-planet,-and-saves-money-too

⁵ Source:https://eatforum.org/content/uploads/2019/07/EAT-Lancet_Commission_Summary_Report.pdf (Page 9-14)

⁶ Source:https://www.health.gov.au/health-topics/smoking-and-tobacco/how-to-quit-smoking/quitting-methods

⁷ Source:Soman, Dilip, and Min Zhao. “The fewer the better: Number of goals and savings behavior.”
Journal of Marketing Research 48.6 (2011): 944-957.