Six out of ten don't have a savings plan
The latest property market news shows home values are continuing to soar. It will bring little joy to first home buyers. However, new research from the Commonwealth Bank shows Australians aged 24-39 can face another, very different hurdle, when it comes to buying a first home.
The CommBank survey found six out of ten millennials don’t have a regular savings plan. A worrisome one in ten are living pay cheque to pay cheque.
Frankly, I suspect these sorts of results aren’t limited to 20- and 30-somethings. Saving isn’t as much fun as spending regardless of age. But the great thing about personal savings is that it gives you choices around what to do with your money to live the life you want to lead.
Growing savings rarely happens by chance, and yes, it can take time. However, a few simple strategies make it easier to step away from the cycle of living payday-to-payday, and get into the habit of saving.
Get to know your spending habits
A variety of free apps like Pocketbook and TrackMySpend provide useful insights into our personal spending habits. They can be quite an eye opener, showing how even low-value purchases can quickly add up, and how much money slips through our fingers each year. Spending apps can also show where you should, or need to, cutback.
Think carefully about buy now, pay later
It’s no secret that buy now, pay later (BNPL) has taken off among millennials. One in two BNPL users are younger than 40, and plenty are caught up juggling multiple accounts.
A new BNPL industry code came into force earlier this year calling for providers to conduct in-depth checks of a consumer’s ability to handle BNPL repayments. But it’s also up to each of us to think about whether adding more ‘stuff’ to our personal possessions is really worth the cost. The satisfaction of growing savings can easily outweigh the short term ‘feel good’ of a new purchase.
Work towards a goal that matters
Done right, goal setting can help you save. One trap to avoid is aiming too high. I’ve come across research that shows setting unrealistic savings goals doesn’t just see people toss in the towel, they often end up spending more than before a goal was put in place!
The trick is to set achievable, specific goals, and take action to make them happen. For example, set up an automatic transfer of funds to your savings account each payday.
Importantly, know why it matters to you to save money. Psychologists say it’s the ‘why’ in your savings plan that can keep you motivated over time. And that applies no matter if you’re saving for a first home, growing rainy day money, or building funds for a decent retirement.
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