In these times of global financial uncertainty, it’s important that people take the opportunity to give themselves a buffer against the winds of economic doubt.
The most recent RaboDirect National Savings and Debt Barometer (NSDB) found that 46 per cent of working Australians admitted to having only one month’s savings or less in the bank to tide them over if they lost their job not a lot of time to keep the debt collectors from knocking at the door!
Here are some practical tips on how to increase your emergency savings:
- Make your savings grow faster: Shop around for the best place for your savings. Leaving them sitting in a low interest accounts is akin to leaving them in your bottom draw in a jar. It’ll be there when you go looking for it again (hopefully) but it won’t have miraculously gotten bigger. Put them in a high interest account online with no fees, set-up a regular savings plan, then come back later and you should find more!
- Compare to get the best deal: It’s never been easier for you to save money if you know where to look. There are a number of price comparison websites where you can compare mortgage rates, insurance companies, utilities, the latest TVs and much more. Why not use them to your advantage? For example, today, standard variable mortgage rates range from to 5.62%p.a. to 7.4%p.a. on a $250,000 mortgage, that could be a difference of $278 a month, or $3336 a year.
- Save while you work: Something as simple as making your own lunch can save you up to $10 a day, or $2400 a year ”“ that’s an extra two weeks of emergency savings if you do happen to find yourself unemployed. If you drive to work, you may also consider taking public transport, riding or walking. Aside from savings on fuel, cycling 10km to work would take 30 to 40 minutes ”“ quicker than traffic moves in peak hour!
- Get fit without the gym: Exercise is a great way to de-stress and stay healthy. However, gyms can be expensive. Why not check out your community gym or use your local park? Even better, make exercise part of your daily routine without even thinking about it ”“ walk a bit further to your bus stop, don’t take the car on short journeys and get a bike for work or the weekends.
- De-clutter: Do we really need to hang on to everything we accumulate in our homes? Clearing out can be therapeutic as well as a financial windfall. A good way to de-clutter is to go through your things and use eBay or a garage sale to get rid of your unwanted items. A sale every six months would soon grow your emergency savings.
There are many other ways to save money as well. A great way to get an idea of what sort of interest you can earn on your savings, for example, is to use a tool like the RaboDirect Interest Calculator. Daily changes such as carpooling, purchasing food in season (out of season fruit can be extremely expensive) and making your own dinners in bulk instead of buying takeaway can save you hundreds, if not thousands of dollars each year.
The RaboDirect National Savings and Debt Barometer also found that regular savers indicated higher levels of happiness and health two of the most important reasons to improve your saving habits! By taking a few simple steps to improve your emergency savings, you can rest easy in the knowledge that, in the unfortunate event of losing your job, you will have enough funds to keep you afloat until you find work again.