Once you are in control of your spending, you can then turn your attention to saving. Establishing a regular savings habit is one of the easiest ways you can feel more in control of your finances. ANZ's 2018 Financial Wellbeing Report (PDF, 5.2MB) indicated having a savings buffer of at least $1,000 was associated with higher financial well-being and with one in four Australians having no savings at all, it’s important to get started.
No amount is too small to start saving, the key is to begin and contribute regularly. Aim for $1,000 in savings to begin with and then work towards a larger amount you can use if unexpected costs occur such as urgent dental work or medical care. You can use ANZ’s Savings Calculator to get started.
So how do you actively save? Michelle Commandeur is ANZ head of financial inclusion and says the best way is to set a smart goal that is specific and measurable. “When you reach a financial goal it gives you a sense of achievement and confidence,” she says. “There are other tips and tricks, such as setting up automatic direct debits into savings accounts or directing a portion of any tax refund you may receive into a high-interest savings account.”
Australians are recording higher levels of debt than ever before. The latest figures from the Australian Bureau of Statistics show that in the 12 years to 2015-16, average household debt had almost doubled, with debt levels rising from $94,100 in 2003-04 to $168,600 in 2015-16.
And it’s not just big purchases Australians are in debt for, more and more of us are relying on credit cards to cover everyday expenses.
ANZ’s 2018 Financial Wellbeing Report (PDF, 5.2MB) found two key behaviours can increase a sense of financial wellbeing – active saving and not borrowing for every day expenses. Commandeur says “Of course, financial wellbeing is affected by other factors such as income, attitudes to money and financial knowledge. While these are important, they aren’t as important as the two key behaviours.”
Commandeur also states a person’s financial wellbeing isn’t just a reflection of their income. “People on lower incomes can have high financial wellbeing and conversely, people on higher incomes do not necessarily have better financial wellbeing,” she says. “This is because those with low financial well-being might not be demonstrating those key behaviours that help people to stay on top of their money and build resilience.”
“If I could give people any other advice it would be to not rely on your credit card,” ANZ financial planner Chris Lin says. “Many people use credit cards to get points but if you miss a couple of payments you will be charged extremely high rates of interest so it’s not doing you any good.”
Protect your income
Once you are in control of your spending and are building up your savings, it’s important to protect your income with appropriate insurances, such as income protection or life insurance. This way, your savings won’t be destroyed in the unfortunate event you die, are unable to work due to illness or injury, or you’re made redundant.
Whether you want to create a budget, open a savings account or take out income protection – do something today to take back control and manage your money better.