How to not overthink your savings goals

The key points of this story are: 

• How to improve your saving and home budget
• How to not overthink goals and simply cut back on spending

Ahhh, savings goals. 

I don’t spend a lot of time setting savings goals, but I do think knowing where you can cut back and save is worth a look.

Mozo research shows that many Australians are trying to simply balance their income and expenses (21% of people surveyed), meaning saving money is an afterthought.

This is part of the problem for would-be savers, according to money saving expert and author of 'Easy Money’ and ‘Kill Bills’, Joel Gibson. It’s important to prioritise saving, he says, which means when money comes in you should move it into your savings first. 

“Many of us might think of savings as the last priority when allocating our money, but prioritising it guarantees you’ll save over time,” says Gibson. “Of course, it’s not easy to do if you’re in debt or you’re over-spending, so you need to get a handle on those first.”

How to better handle debt

Mounting bills and debt have been an issue for many Aussies in our recent high cost times. In fact, 20% of people say the cost of living is getting too high to be able to save and just 21% feel like they have enough money for an emergency, according to Mozo’s research.  

Such figures don’t exactly inspire confidence that Aussies are able to put some money aside for a rainy day, let alone meet actual savings goals. 

So given this tougher economy, just how can you improve your savings? 

I asked Gibson and of his numerous tips, I noted that better money management is a good place to start. He says one of the most obvious barriers to saving is spending more than you earn. 

“If more money is going out than coming in, there’s nothing left to save,” Gibson says. “There’s an old saying that most financial advice comes down to this - spend less than you earn. Invest the rest. And it’s true. 

“Easier said than done, of course, but if you try to do a bit of both that will be the quickest path back to saving a bit of cash at the end of the week or month.”

Gibson also backs the old 50-30-20 rule - 50% of your money goes to needs, 30% savings and debt, 20% to wants. 

RELATED: Use our Mozo savings calculator to work out how much you can save

How to save better

As per the 50-30-20 rule, the best way to look at saving is to think about your essentials versus your nice-to-haves. Some of the purchases you make, whether they’re groceries, take-away coffees or streaming services, can be revised to improve your finances - even if just slightly. 

This is how you can start saving, bit by bit. Let’s consider a few basic areas to cut back on that might help.

How to save on grocery bills. It’s easy to pay too much and it’s easy to buy too many things. Planning your meals and snacks can help reduce your total, but so can a few basic product comparisons. 

How to save on energy bills. These bills can stack up quickly. Think about which appliances you’re using, which can be turned off and which can be used during off-peak times. Limit heating or cooling to a single room, shorten showers, use cold water for washing. 

How to save on streaming services. These can be harder to handle due to the fear of missing out. But there’s no reason why you need all eight services, or even six. Cut down to a couple and save. 

How to save on holidays and going out. No, there’s no need to become a hermit! But being a bit choosy about where you holiday or which restaurant you eat out at can really help your bottom line. Even if it’s just for a short while. 

Savings goals are challenging, you’re not alone

No matter your age or your personal financial situation, savings goals can be difficult to meet. So it’s important to set your own realistic goals. 

Our Mozo research shows that only 18% of Aussies surveyed say they’re on track to meet savings goals. Also of note is that older people, those between 43 - 58 and also those between 59-68, for example, seem less able to meet their savings goals. 

But don’t compare yourself to others. Target areas that work for you, where even a couple of dollars saved here or there can start to build your savings tally.

Of course, you’ll need somewhere to park your money and so to help with that step, our Mozo experts have reviewed and handpicked some of the best savings accounts on the market for you to compare. Happy saving!