Reaching financial independance with a smile. Hi there! Welcome to All About Balance, a blog about reaching financial independence while still having a life! Have a look around to find tips and tricks on saving, investing, and growing your income while maintaining strong relationships and a healthy body and mind.
The essential handbook to living frugally, mindfully and with real joy
on a budget.
Who knew frugality could be so much fun?
Australians are amongst the wealthiest people on the planet, but for some
reason we don’t like to think or talk about money. Once upon a time, thrift and
frugality were celebrated as virtues – not anymore. When did ‘frugal’ become
such a dirty word? It’s time to reclaim it!
When you respect and understand money, it almost magically transforms itself
into something that grows exponentially. In The Joyful Frugalista, Money Magazine’s Serina Bird shares
myriad practical tips for saving money in small ways every day for a better,
Ideas and resources for saving on
everything from energy bills to weddings, clothing and eating out
Clever ways to cut down your waste
Tips for embracing the joy of
Ways to wring every drop of pleasure
from the money you have
Challenges to help you live life
better, including how to feed your family well on $50 per week.
The Joyful Frugalista is the essential handbook to living frugally, mindfully and with real joy on any budget.
Frugalista. What a great word.
I hadn’t heard it before, and indeed it isn’t a word that
spellcheck registered either. Though the way that Serina describes being a frugalista
and what it means, I want to be part of it.
Serina describes being a frugalista as ‘someone who lives
the good life, while still living frugally.’ It isn’t someone who is cheap,
nasty, or trying to rip others off to benefit themselves, but rather someone
who is conscious of where their money is spent. By doing this they can
prioritise what is important to them and not feel any pressure to spend their valuable
resources of money and time elsewhere.
Through real life examples and anecdotes, the book proves
that a frugal life can be fun, inspiring, creative and even exciting. It doesn’t
need to be something to be embarrassed about or hide away – in fact, looking
from the outside many people commented that her life always looked very glamourous.
There are mini boxes throughout that each list a different ‘frugalista
challenge.’ These are practical steps you can take along the way and there is
even a handy notes section in the back of the book to write down your answers
too. These include such things as; recording
what you spend, reducing utility costs, saving money in the kitchen, not buying
new clothes, challenging your need for a second car, asking for a better deal,
using discount vouchers and finding free stuff!
These challenges are supported by a range of useful recipes,
tips and life lessons to really help you achieve great results.
Who should read it?
While I believe both males and females may enjoy reading
this book I feel it does have more of a ‘girl power’ vibe. It is as much about
knowing your self-worth as it is about saving a dollar.
Serina weaves helpful tips into a very real and honest story
of her life. I found this approach was very interesting and engaging. While I
love a good text book, often the most important part is the story behind the
teacher to get the context and have the lesson stick.
If you are just looking for some quick tips, without a person
behind them sharing thoughts, feelings and ideas that might hit a raw nerve
(such as divorce, cheating and domestic violence) this may not be the book for
The extreme openness of this book makes it both confronting and
inspiring. I hope the more people write raw stories such as this and share
deep, personal experiences, the sooner that society moves towards talking more
about money and the huge role it plays in our life.
Don’t be afraid to discuss your finances and fugalista lifestyle with your friends, family, or hey even strangers on the internet. The more it is discussed the more we can learn from each other and inspire a modern approach to finances and overall consumption.
Serina Bird is a proud frugalista and mother of two who blogs about her journey to becoming a millionaire (and her goal of being a billionaire one day). Her advice and experiences of budgeting, investing and living a luxurious life on less have also appeared in the Sun-Herald, Money Magazine and news.com.au. The Joyful Frugalista is her first book.
I have been a bit slow to get this post up, especially since I couldn’t wait to play around with all the numbers, look at how I went, analyse where I could have gone better, and play with pretty charts.
I love reading other people’s spending reports and comparing as well – which I’ve also done while procrastinating writing my own.
Without further time wasting – here is a pretty chart for my 2018 spending
If you read my post about the 3 largest expenses in Australia, you will see that I absolutely hit number one – housing being my biggest expense! Though through hard work reducing my other large expenses I don’t find Food & Drink or Transport in the top 3 on my list.
In early 2018, I managed to reduce my transport costs by moving closer to work – saving me the drudgery of a workplace commute. It also turns out I don’t eat much -though if you ask my friends and family I certainly do! I believe this is due to having a good balance between eating out and eating at home and having $5 dinner parties with friends.
So besides housing (which is just rent money let’s be real) where did my money go in 2018?
My second biggest expense is Travel.
In 2018 I took a 5 day trip to the Northern Territory with a friend and had a few weekends away camping or using family holiday houses. Nothing too crazy here. This expense line item was definitely bumped up by pre-paying our 2 week trip to South Africa we will be taking in February 2019. I could have saved that expense until Feb, but I prefer to capture it when the money actually leaves my account.
My third largest expense was Miscellaneous.
I’m not sure how I feel about this category really. It seemed to be a catch-all for the big things I forgot to include in my other line items. This category included such things as; moving costs, clothes, shoes x 3, new mattress, sheets, bedroom furniture, curtains, backpack, books x 3, massages x 2, headphones and a fridge. Most of these costs were at the beginning of the year and all part of the ‘moving closer to work because the owner was selling our apartment’ thing. Luckily they are pretty much all once off costs there and should not appear again in 2019.
I’d like to breakdown some of this category further in 2019 and have already created separate categories for clothes/shoes, household goods/appliances, and a bucket called ‘me’ which will be books, haircuts, massages etc.
What makes me happiest to see?
I’m pretty happy with seeing only 1% of spending on each of the categories for Mobile Phone, Internet and Electricity. I do review somewhat regularly to make sure I’mn getting the best deal on these basic bills and it looks like it has paid off. I will admit though that I do not spend hours on checking deals or even do it as regularly as some people. I’m also a little bit lazy if I’m honest.
There have been some great deals this past year with Kogan doing buy 1-get-1-free type deals on mobile and other such things but I’m not inclined to jump* for a short term and then need to find something else just to save a small amount – not to mention needing a friend to go halves lol. I weigh up the options and decide if it is worth my time. This year, instead of jumping carriers for a 12 month deal, I did a quick comparison on my current provider’s website (ALDI) and found that with my regular usage I could downgrade my plan and save $5 per month with just the click of a button.
I did a bit of research when I moved in Feb 2018 for both electricity and internet and was happy to sign up to 2 year agreements with both providers as they were the best deal at the time (and as you can see only 1% of my spending each). I’m happy with both and will review again at the end of the contract period.
If you too don’t want to spend your valuable time looking at deals and are in Australia, I recommend checking out Spending Hacker as they will happily do the heavy lifting for you.
* am I being silly here – is it a lot of effort to switch phone providers? I feel like saving <$3 a month isn’t worth it but feel free to prove me wrong in the comments.
And not happy about?
I’m actually not upset by anything here. I know I saved almost 60% of my income in 2018 and as such this represents just over 40% of what I earned, making some of these numbers even smaller in comparison to my income. As I discussed above I would like to see the ‘misc’ category reduce in 2019, but when I broke down where that money went I wasn’t unhappy and didn’t regret anything I purchased (yes even the expensive end of year sale sheets ;))
The other biggest expense is rent. Unfortunately, I live in an expensive city (thanks Sydney!) and I made a conscious choice to live where I do now. I could, of course, move further away from my work, or to the country where rental prices are cheaper, however that wouldn’t fit into my current lifestyle, my choice to be close to work and family. I do choose to live with just 1 flatmate rather than 4 or 5 to reduce prices further because I enjoy my space and privacy too.
After 10 years of renting, I look back and say ‘ouch’ sometimes at the amount of money I’ve seemingly thrown down the drain. However renting has also allowed me to live in many different locations throughout uni, moving overseas, and then finally closer back near family. It has also allowed me to invest the difference in the cost of a mortgage and home maintenance in the share market to grow an extra income stream. I may not have had the same level of flexibility and additional income if I purchased a home of my own in that period of my life. With that, I have no choice but to be comfortable with the spending on rent.
The idea of living wisely and saving towards financial independence isn’t about deprivation or going without. It is about choosing to spend money on things I enjoy such as travel and things I use around the house every day.
Did you track your spending in 2018? Were you surprised by anything that came out of the numbers?
Let me know in the comments below if your spending varied wildly from mine – I’d love to hear from you.
December brought with it a little work, a little, friend time, a little volunteering and a whole lotta Christmas!
It is by far my favourite time of the year and this year was no exception. It is a wonderful mix of great weather (minus the random storms in Sydney this year) and all of the fun things, including some much needed time off at the end of the year to reflect on what was 2018.
I hope you have had a chance to review your goals for 2018 and see how you tracked against them. Don’t forget to celebrate your wins and look forward to moving forward into the new year with all that you have achieved.
If you are new here this monthly update serves two purposes. It keeps me on track to meet my goals. And also gives me an opportunity to reflect back on the month that was and be grateful for all that I do have. I encourage you to try this too. You may have one bad day, or even two, but at the end of the month you can look back and see that it wasn’t all that bad after all – just a blip on the radar in terms of your life.
As per above, there was a lot going on in December which included almost all of my family and friends at some stage throughout the month. I love how everyone makes an extra special effort this time of year to catch up and spend time with loved ones. It is what the festive season is all about for me.
In 2018 my goal is to save an average of 60% of my take home pay.
So how much did I save in December to round out the year? Drum roll please……
My savings rate for December 2018 was 8.72%.
And no, that isn’t a typo.
What happened you ask? Life happened apparently.
My fridge died and needed replacing (Not such a bad news story though as the one I had was gifted to me when I first moved out of home 10 years ago and has lived a total of 24 good years so it has done really well to get me this far. I bet my new fridge won’t last that long….)
I had to pay privately to see two specialists for two different health issues (one will lead to a large bill in Jan as well, the other is still an unknown – yay). While it isn’t ideal I can’t say no to my health and am more than happy to spend in this area (p.s. private health would have been next to useless here anyway so these bills were smaller than joining up for me still)
May have gone a little crazy in boxing day sale (whoops – but in my defence, my summer sheets are starting to wear out and my winter sheets have had a hole in them for about 3 years now…. I got 2 beautiful organic cotton new sets for 50% off – this was before I knew my fridge would die!)
Pre-paid for the Africa Trip coming up in Feb 2019!
So while I was busy living, my savings rate took an unfortunate hit. However my average yearly savings rate 58.92%.
While slightly under my goal of 60% for the year, with everything that happened in December, I am so very grateful that I did so well earlier in the year and that I had a healthy savings rate buffer to work with.
3. Physical Health
a) Hitting 7,000 steps per day minimum
So my fitbit stopped syncing to my phone on 23 December and I haven’t been able to get it to connect again since (yes I tried turning it off and on, delete the app, redownload etc etc).
That isn’t the only thing that doesn’t work on my phone;
I haven’t been able to text Mr B for at least 18 months now (we use facebook messenger instead)
Apps crash all the time meaning I have to try again and again just to upload 1 photo or witty reply on social media
The storage is poor and forces me to regualrly delete apps to download new ones and remove all my photos to my laptop (though that isn’t necessairly a bad thing as it forces me to really decide if I need an app or not and makes me more organised with backing up and sorting photos….
Anyway, this section isn’t about my crappy phone but I think this will be the final straw for getting a new one (probably early next year) as I really like to track my fitness goals. I know this is an area I could really improve on and just working towards hitting a step count each day and being able to track over the month has been really helpful for me.
Without further side rants, on 22 December my average for the previous 28 days was 8,126 steps. So I’m going to go ahead and call that a win, even if I don’t have the extra week of data.
4. Community & Spirit
Volunteering went ahead in December and provided that usual ‘feel good’ feeling and something I will happily continue in 2019. I am looking forward to a mix of time and money contributions for next year as well as they offer such different feelings and experiences that doing just one or the other won’t quite be enough for me anymore – I need to see the difference I am making and sometimes cash just doesn’t offer that.
5. Mental Health
Being unwell myself throughout the month (and for a while now on and off) has caused a few down days, but I find if I acknowledge the emotions and talk to people about it, it helps move through that stage. I did certainly have so many wonderful days in December though (see above all the amazingness that is the holidays).
6. Read at least 15 books
Well ahead on this goal I didn’t slow down. I kept reading, though switched to some fiction and other random topics as well. As I currently have a few books on the go, some being quite large and will take a while, I didn’t actually finish any more books in December so the list still stands as what was finished before the end of this calendar year (though I did forget about one book I read earlier maybe Oct/Nov as I borrowed it from my flatmate rather than the library so I’ve added that).
This was one of my favourite goals for the year and I am so glad I added it in. It has really tested me to find time in my day and resulted in much less tv/wasted time in the evenings. I used to believe I didn’t have much energy at the end of a long day for reading, but I’ve proved that wrong and now really look forward to the wind-down time.
I am always hopeful when I set my goals for the year that I can achieve them. Though I always enjoy setting a few to be stretch goals as well to see if I can really push myself to grow even more. I don’t always reach or exceed them (see savings rate goal above) but sometimes I go further than I thought was possible (see book read – booyah). What’s most important is that with setting goals and working towards them one month at a time, I can really make a big difference in just one year and you can too!
What did you achieve this month? What about over the entire year of 2018? Are you happy with all you have achieved? Do you find it is more than you thought was possible at the beginning of the year?
Are you thinking about early retirement? Or have just come across this crazy concept and wondering what steps you should take before quitting your 9-5?
The team at RP Emery have some tips before you head off to early retirement.
Set Your Finances in Order
One of the main keys to a sustainable retirement is having your finances in good order. Specifically, this means having a solid budget in place where you have a clear idea of your weekly, monthly, yearly expenses, as well as reducing or eliminating any debt. Your necessary living expenses are going to be reasonable and manageable. It’s things like credit card debt, car payments, mortgages, and student loan debts that make early retirement difficult for most people.
Allocate Money for Yourself
As you are working on getting your finances in order, it may be tempting to throw all the money you can at the debt. However, to build that long-term kind of wealth that will allow for early retirement, you need to treat your savings account as if it is one of your monthly expenses.
Adding money to your long-term savings account must be mandatory.
Investment assets come in all kinds of different packages, all with different benefits and pitfalls. If you want to enjoy an early retirement, you need to do your research and find the investments that will start producing a passive income as soon as possible.
Superannuation (or retirement accounts for our international readers) can seem a bit complicated at first. However, understanding how it works will allow you to make better plans for your retirement. If your plan is to retire early, your super is probably not in the forefront of your thoughts. However, even if you can’t access your superannuation until a certain age, it should still play a part in your considerations before retirement.
Plan, Plan, then Plan Some More
As they say, even the best-laid plans often go awry. Planning in the best way to make sure you don’t get caught off guard, however, nothing can fully prevent you from having unexpected expenses take you by surprise.
Make sure your plan has enough flexibility to allow for changes. You should have reserves for “just in case” and have a plan B (such as possibly returning to the workforce) if things go don’t to plan.
Early retirement is a tempting road for many. We hope this simple checklist will increase your confidence before you leave the rat race.
Chances are you did so whilst looking at a burgeoning wardrobe. What you were experiencing wasn’t a lack of clothing options, but rather fashion fatigue* from having too many choices.
*a beautifully alliterating term I just coined to describe mental fatigue of choosing an outfit
Why are people buying more?
As a fully grown adult (though to be fair I stopped ‘growing’ back in high school as a teenager) I don’t find my sizing changes all that much year to year, if at all. So while young children grow out of things quite quickly, it isn’t until something wears out that I really need to replace it. Unless an adult has gone through a big transformation; such as a large amount of weight loss (or gain), post-pregnancy, or other similar circumstances, there shouldn’t be a need to continue to purchase more and more items each year.
So why do we do it?
FOMO and Fashion
Sale! New Season! Last chance buys!
Every time you go to the shops you are bombarded with messages about buying with an increasing amount compelling you to get it now or forever miss out on the limited edition bright pink and gold sneakers….
Not to mention the rise of social media and continually being reminding us we need to consistently be fashionable and on trend. I feel this pressure is even greater for women. Mr B wears the same suit (with a couple of shirts rotated) to every wedding, christening and other ‘smart’ event we attend and nobody says a thing – or likely even notices. However the pressure for women to wear a different dress (shoes, bag, accessories) to each event is forced upon us from a young age and hard to move away from, even with a frugal mindset.
My personal experiences with this can be highlighted pre-frugality with very regular ‘girls shopping days’ in school and university where it was very normal and costly to go dress shopping very regularly (circa 1-2 new dresses per month, many of which went unworn). While I always had a small element of ‘don’t care what others think’ in me, I still got caught up in these rituals.
Lower costs = more spending. What?
The ABS has released data on retail spending for June 2018. The data shows that the cost of fashion has decreased by 4% during the quarter and has resulted in consumers purchasing 7% more! So even when we are given the opportunity to spend less and save more, we instead choose to stock up!
Reducing the cost of clothing
The easiest and most obvious choice to reduce spending on clothing and fashion items is to simply stop buying them. Now I’m not suggesting that you bare all, but you could get creative and greatly reduce your ongoing outlay for clothing. My top tips are below.
Ban Buying New
The best way to break a shopping habit is to go on a buying ban. Science says it takes 30 days to break a habit, so no clothes shopping for at least a month. If you feel like you ‘need’ something during this time, write it down on a piece of paper and at the end of the 30 days, revisit the list and see if you still really need it.
Once you’ve broken the habit, it will be easier to be thoughtful about purchases in the future. With the other tips below, you may not even need to buy new again (except underwear IMO).
Buy Quality Less often
Disposable fashion may be cheap now, but it will cost you in the long run if it wears out and you need to continually replace it. I learnt this lesson when purchasing some new canvas shoes last year. I opted for the cheapest pair I could find and within a week they had a hole in the top and looked ratty. While did continue to wear them for quite some time (I’m stubborn like that) they certainly weren’t able to be worn on all occasions. This year, I purchased a more expensive pair of shoes that I hope will last me for years to come.
Be open to second hand
If friends are clearing out their wardrobes, don’t be shy in accepting gently used items. Over the years I’ve accumulated many items from friends, family and neighbours who are passing on things that no longer fit, the no longer love or sometimes have never even worn. The interesting thing is that once people found out I was open to getting secondhand items, more seemed to manifest their way into my life – and this is exactly how I get my summer wardrobe for FREE! A big box of goodies showed up on my doorstep from Mr B’s mums, best friends, daughter who thought I might like to look at what she as giving away before it went to charity. A lovely gift from someone who I’ve never met.
Being open to secondhand could be taken more formally as well and arranged into a day where everyone brings along items they are happy to part with and goes home with something else new to them.
My new summer wardrobe – all for free!
Get the best price
Of course, if you insist on buying new, at least ensure you wait for the sales and/or get the best price by shopping around. My favourite new helper with getting the best deal is Cashrewards. Simply download the browser extension and shop at your favourite retailers – there are over 1200 to choose from including Woolworths, ASOS, The Iconic, Dan Murphy’s, eBay, Expedia, Bonds, Myer, NET-A-PORTER and David Jones. You will get a notification when you are on a website that is eligible for cash back. Super easy. I currently earn around $10 per month cashback as well as receiving other discounts on gift cards. If you use my referral link and make a purchase both you and I will get $10.
Have you tried a clothing swap? Do you have any other tips for saving money on clothing costs?
Last night I really enjoyed presenting and talking to everyone at the “FIRE-SIDE CHAT: HOW TO RETIRE BY 40”
There were three speakers; Matt Leibowitz Founder & CEO at Stake; James Millard, Founder & Advisor at Sufficient Funds and myself who presented on one topic each followed by a panel and general Q&A where we discussed;
What the FIRE movement is
Practical tips and tricks to save more and spend less
How to grow your money faster
How to find your life passion
Why you should join the FIRE movement and more!
If you missed out last night, keep reading as I share my presentation below
How to save on life’s biggest expenses
The household saving rate in Australia decreased to 1% in the second quarter of 2018 hitting a 10 year low! This is despite spending growing in areas such as food and recreation. As a nation, we aren’t the best savers. Controversially I’d like to say that older generations who lived through tougher times were much better at it than we are. Yes, house prices in major cities have increased, and we are always discussing stagnant wages, I understand these issues (and that’s a whole other topic). However, a lot of expenses have also decreased (think flights, cars, technology). Instead of focussing on things outside my control, what I want to focus on is what I can do with the money I do have. Currently, I am saving around 60% of my net pay each month and I’d to share you with my biggest tips on how you too can increase your savings rate.
Want to find some real savings in your budget?
Sure, you can always cut back on lots of little extras (avocado toast and lattes get a lot of media attention), but it’s your biggest expenses where you can really make a difference. If you get your large recurring expenses under control, you will have extra cash flow for debt repayment, investing or even that guilt-free brunch with friends.
Decision fatigue is real, and we generally have less control over our decisions than we’d like to believe. If you are emotionally overwhelmed then your body is going to stop thinking rationally and want to just make a quick decision just to get it over with. Unfortunately, the result is often out of whack with your long-term goals; hello bingeing when on a diet!
When it comes to saving money, it is easier to make a handful of big decisions that are set and forget (or make the savings up front) than expecting yourself to make hundreds of little (and good) decisions each and every day.
So what are our 3 Biggest Expenses?
According to the Australian Bureau of Statistics Household Expenditure Survey*, the average Aussie spent about half of their money on housing, food and transport.
Average Spend Week
Average Spend Year
Percentage of spending
Food & drink
Biggest Expense 1 – HOUSING
If you plan on owning your own home the biggest savings will come from up front decisions before the purchase. Not only should you consider the often cited ‘location, location, location’ but also how much house you really need.
This is a tough one to say here in Sydney, but considering location is really important. Do you need to live at the beach, or could you live a few blocks back? The same goes for the CBD. Could you move to an outer suburb to save more? I’m personally not interested in moving to Broken Hill where the median house price is $149,000, but more than happy to settle in Sydney’s outer suburbs where prices are half that of the premier city suburbs.
For a single person or a young family do you really need a 5 bedroom house?
According to Census data also 80% of Aussie households have a spare bedroom that they don’t use regularly. For each room you cut back on, having only what you need and will use, you could save around $95,000 off the sale price.
If you’ve already purchased, don’t despair, you can still save too. These are my top tips for savings on an already purchased home;
If you did opt for the extra bedroom you could rent it out, or host an exchange student.
Check each year make sure you have the best mortgage rate
Pay your mortgage weekly or fortnight to reduce interest
Look into an offset account and see if it would for you
Stay as long as you can. The buying and selling costs of property are high and on average take about 11 years to offset
I personally choose to rent for now as it gives me greater flexibility on how I spend my money. My top tips for savings as a renter are;
Flatmates! Don’t be afraid to share with others to reduce costs, not only on rent but also bills too.
Choose a smaller and/or slightly older place. My current flatmate and I live in quite an old building that has been well looked after and it is less than half the rent of a shiny new building up the road.
Know the market. Look up rent prices in your chosen area and know what the average is. If your real estate advises there will be a rent rise, you’ll be able to know if it is in line with the area, or if you should write back with reasons why it isn’t competitive. I’ve had a rent increase taken back with this approach.
Just remember if you are renting, that you should be saving and investing between rent prices and the costs of home ownership. Investing is the fastest way to increase your wealth – James and Matt will touch more on that later.
Biggest Expense 2 – FOOD & DRINK
The ABS data counted food and drink as groceries, eating out and take away, but not alcohol, that had a category all on its own which I won’t touch on here (phew! I’m glad it didn’t show up in the top 3!)
I’m personally a lover of food and eating out, so I’d be a hypocrite if I told you to never eat out (just check out my monthly spending reports on the blog and you’ll see a large ‘eating out’ line item).
Instead, I’d like to focus on the $20 billion of food we throw out each and every year!! One in five shopping bags, the equivalent of four million tonnes of food, ends up in landfill. That’s $3,800 worth of groceries per household per year. By only buying what you need, you could literally save thousands (and help the planet). My top tips for only buying what you need are;
Make a list, no more impulse buys; yes even if they are on sale
Don’t shop on an empty stomach
Only buy in bulk if you’ll use the products before they go bad
More tips to reduce food costs
If you have more willpower than me and do want to eat out more, you can save even more by doing the following;
Plan your meals and cook in batches #mealprep
Look at unit pricing when comparing items
Buy no name brands for products you don’t notice the difference in
Know your prices so you can tell if it is a bargain or a clever marketing ploy
If it is a bargain, then stock up. This is best for non-perishables see point above about 20% of all items going in the bin
Don’t buy convenience foods; yes you can chop your own carrots!
Biggest Expense 3 – TRANSPORT
Do you need a car? This is a hard question to answer and the result will be different for everyone. I personally choose to keep a car as it is used in earning me extra income. However if it isn’t helping you make money and is only taking money from you perhaps you could consider using alternate means of transport. This might be even easier for 2 (or 3) car families.
Trial some alternative transport options and see if these could work for you;
Walk – the age-old concept really is good for your wallet and your health. I mostly choose to walk anywhere that is less than 2.5km where possible.
Ride a bike – again something that has multiple benefits and can get you places slightly further away and quicker than walking
Public transport – being in Sydney there is no reason most people couldn’t take public transport for cheaper than owning a car. Sure, sometimes there are delays, and other people can sometimes invade your personal space, but think of the savings!
If you can reduce your car usage to only 1-2 longer trips per month, you need to consider if the cost of yearly insurance, registration and maintenance is really worth it or if there could be suitable alternatives such as car hire or sharing. There are lots of new companies that can help you rent a car only for the times you need it such as car next door, go get and many others.
If you do need a car– before you buy
Similarly to buying a house, the biggest savings you can have when buying a car is in the purchase price. Unless it is one of your top values in life DO NOT buy a new car. Cars are depreciating assets and as soon as you drive it out of the lot it loses around 20-30% of its value. Fast forward 3 years and if it is in great condition you could still only reap around 50% of the price if you sell. Instead, do your research on a modest and reliable car that may already have depreciated quite a bit and grab yourself a good deal*.
*don’t be too cheap though and end up spending far more on ongoing repairs – find the balance
Pay in cash
According to the 2016 ABS Motor vehicle census, 59% of people borrow money for the purchase of a car, with the average cost of the car being $27,994. Car loans are currently sitting at 5.49% so on a 5-year loan you end up spending an extra $4,082 more than you need to. Instead, I suggest you save up for a car, even if that means delaying the purchase for a while. And as soon as you do purchase something, keep saving so when you need a new car (hopefully not for 10+ years) you’ll have the funds put aside to pay cash again.
By being aware and making some big decisions up front on your 3 biggest expenses you reap larger savings rewards with less effort. Buying a cheaper home, sharing with flatmates, reducing food waste, cooking at home and riding a bike or taking public transport are all great ways to reduce your expenses quickly.
I’ve personally experienced the great benefits of these saving strategies. I hope you can take something away from this and make some changes to see bigger savings in your future.
Have you tried any of these savings tips? What other ways would you suggest savings on the big 3 expenses?