Get your savings mojo back with this 4 step financial Spring clean

If your savings mojo has been dormant over the winter months, Spring is here and this means it’s time to jolt out of hibernation so that you can hit some goals by the end of the year.  

You can kick start your savings again pretty quickly and it doesn’t have to mean lots of sacrifices. In fact, it can be as simple as spending a couple of hours doing a thorough clean up of our everyday spending and household bills. 

Aargh, I hear you say. But isn’t a couple of hours of your time worth it if you can sweep up hundreds, if not thousands of dollars in savings?  

Simply follow these 4 simple steps.

Step 1: Declutter your spending

Time to pull up your bank account statement or banking app and go through your spending line by line. You could find that your bank’s app has done a lot of the heavy lifting for you already by classifying your spending into categories. If not, maybe consider switching bank accounts to one that does.  

Unused subscriptions are a real money suck these days. A couple of dollars each week doesn’t seem like much but it adds up. Waste $5 a week on just one unused app subscription and that’s $260 you could have saved or spent on something else.

Are there any other glaring regular weekly expenses that you could ditch or reduce in frequency (like that crispy pork bahn mi)? Go through your spending line by line to see where there are leaks you can plug easily. 

Step 2: Optimise your bills 

This is where you can make some serious savings, especially if it’s been a while since you last compared deals for your energy, internet, insurance and mortgage. 

Interest rates on home loans have been falling since the RBA cuts but every extra percent lower that you can reduce is going to have a massive impact on your bottom line. For instance, on an owner-occupier $600,000 home loan over 25 years, if you are paying the average interest rate of 6.09% p.a^, if you were to reduce the rate by 0.50% to 5.59% p.a., you’d pay $138 less a month. Over a year that’s a saving of $1,656! 

Step 3: Organise your debts

Focus on any debts with the highest interest rates first. If you carry a balance on your credit card regularly, you could be paying high interest rates unnecessarily. There are a number of 0% balance transfer credit cards that could give you some breathing room and help you to save money on interest. 

For example, using the Mozo credit card repayments calculator, if you had a $5000 card balance with an interest rate of 19.99% p.a., and made repayments of $200 a month, it would take 1 year and 6 months to pay off the card and cost $461 in interest. If you switched to a card with a 0% p.a. balance transfer deal for 18 months, you’d pay off the card in 15 months and save $461 in interest. Note that some cards do have a balance transfer fee that can be between 1-3% of the total balance transferred. 

A debt consolidation loan might also be a useful option if you’re juggling multiple loans and repayment dates. By rolling all the debt into a single loan, you could save on interest and find it easier to stick to a more regular repayment schedule.

Step 4: Clean up your savings 

The final step in your spring cleaning purge is to ensure that the money you save is going towards helping you reach your goals, whether short or in the long term.

Make sure you’ve got a savings account that’s going to earn you the best returns for your situation. High interest savings accounts usually have conditions attached – you can set up automatic transfers so that you’ll always meet the conditions required. 

If you are thinking longer term, consider making voluntary payments into your superannuation. It might be a more tax effective strategy for you and possibly deliver better returns over the long term.