Saving money often draws the short straw in personal money management, though COVID has changed this.
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A study by ME Bank found one in two Australians say the pandemic has forced them to change their financial focus, and household savings surged by more than $100 billion in 2020.
Nonetheless, saving doesn't necessarily come easily for all of us.
According to Finder, two out of five Australians admit to being enthusiastic spenders, and it's often our money mindset rather than personal income that acts as a barrier.
Humans tend to place more value on things we can enjoy today.
Happily, there are ways to hit the reset button and make growing savings a priority.
A simple step is to pay yourself first. With this strategy you only make one decision: what proportion of your income can you save?
If you're confident you can save 5 per cent, have that amount transferred into your savings before you can spend it. Setting up a regular transfer of funds makes this easy.
Consider giving your savings account an identity that matches your goal. If you're a first home buyer for example, try nicknaming your savings account "my first home". It helps to reinforce what the money is for, which can deter you from dipping into the account.
It also helps to understand the psychology of spending.
Research shows that "shopper's high" is a thing. But it's the process of deciding what to buy rather than making the purchase that releases the feel-good chemical dopamine. This being the case, aim to walk away from impulse buys - if only for a few minutes. Weigh up whether the purchase will really add to your life. If the answer is "no" keep walking.
If you're saving for long-term goals, think about spreading your money across a variety of investments - not just cash accounts. Exchange traded funds make diversification easy at very little cost.
