word from the wise: how to take control of your cashola

If one of your resolutions this year was to get on top of your bank account (instead of running behind it every month), then look no further. We’ve scored some tips and tricks from finance expert Vanessa De Groot (who, by the way, used to be one of the brains behind Australian Property Investor magazine). Here’s to saving some serious moolah!

What’s the biggest mistake people make with their money? I’d say it’s probably spending too much, particularly on frivolous items and not exercising restraint. We see it, we want it, we buy it. Generally, you should be aiming to spend less than what you earn, and to invest the difference to really grow your wealth – whether that be in a savings account, in property, shares, super, etc. If your budget isn’t balancing and you’re spending more than you earn, then quite simply you need to make cutbacks somewhere.

For some, getting real about budgets and spending can be a daunting exercise – any advice on how to tackle negative feelings towards it? It can be quite a chore at times, but it’s something that everyone simply must do. Once you’ve got it set up, the good news is that it’s pretty simple to follow. If you’re part of a couple you need to talk about money, and you could do it together, perhaps while having a nice meal to make it a little more interesting. Once you start to see how you can make savings, it can become a challenge and a little more exciting. And, of course, setting up little rewards along the way will help keep you motivated.

Do you have any tips and tricks on how to save more dollars each month? The most obvious ones that we’ve all heard many times are really the ones that will help you make savings – like not buying a coffee every day and bringing your lunch to work. Many people scoff at this and you might think the savings are only small, but if you add them all up it actually does make quite a difference to your overall budget and savings. One coffee a day at $3.50 is $1277.50 per year, while buying your lunch (let’s say at $10 each work day for 48 weeks a year) is $2400.

Not buying clothes or the latest fashion is another area where you can make savings. While I don’t suggest compromising on your health, you can get rid of your gym membership and instead exercise at home, and don’t buy the latest technological gadgets. Put simply, it’s all about becoming more aware of every dollar you’re spending and thinking twice about it to maximise your savings.

Is there any way to save without compromising your lifestyle? There are actually quite a lot of free – or relatively cheap – activities around. City councils put on events, including free exercise classes. There are markets, festivals, and community events. You can still go out to bars or restaurants, but be the designated driver or choose the cheaper items on the menu. Alternatively, you can eat before you go and then just have a snack when you’re there.

If you want to get on top of your finances and save for your future, there will be some compromise involved. You won’t be able to eat out every night and you may not be able to go on a holiday every year. Sacrifices always have to be made, but it doesn’t have to be as dire as some might think!

What are some strategies to implement when you’re feeling tempted to splash out on a new pair of shoes or a fancy dinner? Ask yourself: Do I really need this? The answer is probably no. It might be nice to have a new pair of shoes, but unless all your other shoes are worn out, you probably shouldn’t be buying it, if you’re working towards a savings goal or you’re already in debt. Maybe when you’re tempted you could log into your bank account to see your balance, or keep a picture of whatever you’re saving for handy on your phone to remind you – whether that be a home, a trip, etc.

You have to be very disciplined if you truly want to take control of your finances, as spending here or there can get out of control very quickly.

Do you know of any useful money apps or planners to help keep yourself accountable? I think a simple spreadsheet is adequate for a budget, and even to track your spending, but for something more sophisticated my go-to would probably be ASIC – they have a budget on their MoneySmart website and an app called TrackMySpend.

Anything else you’d like to let us know? Start NOW! That goes for getting on top of your finances and saving. It’s no use whinging about how hard it is to save; you just have to start. Even if you’re only putting away $20 a week. It’s a starting point!