How I saved an extra $10k this year without changing my lifestyle

saved an extra $10k this year orange wealth

March 28, 2018 How I saved an extra $10k this year without changing my lifestyle

Think savings and you typically equate squirrelling money away with having to curb your lifestyle, depending on what your savings goals are.

This time last year, my wife Kim and I set ourselves a goal: to put away an extra $10K in savings over the course of a year without impacting on our day-to-day lives too much. Not an easy feat when you have two young children.

Once we got into the nitty-gritty of brainstorming ways we could cut back here and there, the biggest revelation for me was just how many expenses are easy to overlook.

Whether that’s simply a case of ‘Oh, that’s just too hard’, or that they’re so incidental they don’t even enter your thought process.

With the latter in mind, it’s only when you added all those incidental expenses up together that you realise just how much extra you’re potentially spending. They really add up.

Up for the challenge? Here are the core savings areas that Kim and I targeted and how I saved an extra $10k this year without changing my lifestyle…

Renegotiating the mortgage

If you have a home loan, it’s easy to get trapped into thinking it’s too hard and costly to renegotiate your mortgage or switch banks altogether for a better deal.

Let’s put things in perspective for a second. The smallest of percentages can save or cost you a small fortune. We renegotiated our rate by 0.5 percent early last year. Now, get this – that half-a-percentage decrease equated to a $150 per month. On, say, a $500K loan, if you put that extra $150 into paying down the mortgage it could save you a princely sum of $50K over the life of the loan. From our perspective, it was well worth the effort.

Saving: $1,800

Wondering if you are paying too much? Take this 60 second quick quiz to find out.

 

Switching to cash

I’ve likely mentioned this a hundred times before, but cash is king when it comes to spending week-to-week.

Look at it in the same way you would if you were writing a dietary plan, mapping out each meal of the day over a set period – and sticking to it.

Having a finite amount of cash in your wallet and knowing your budgetary parameters are great ways to keep on top of your everyday spending.

Kim and I saved $5,000 over the course of the year and, to be fair, neither of us felt like we were doing it tough.

Saving: $5,000 ($50 each per week)

Sticking to a 30-day rule

You’ll set your own parameters, but Kim and I set a rule where we couldn’t spend more than $500 on luxury items each month.

And by that I mean a new stereo or furniture, for example. If an item exceeded $500 during a particular month, we put off buying it.

Saving: $2,000

Cutting our energy bill

Now, if you read my blog article last year, you’ll know the rising cost of utilities is a bit of a sore point.

And fair enough – gas and electricity costs are at the point of being ridiculous.

Utilities fall into a similar camp as mortgages. Switching providers is actually a lot easier than you might think.

We did, and we were $700 better off than last year. When you compare rates with other providers you start to realise how much you can save with another provider.

Another thing to consider is that some companies offer fixed rates over a set period (much like a fixed term home loan). Anyway, food for thought.

Saving: $700

Getting power smart

On top of switching energy providers, we installed LEDs throughout the house.

The upshot is that we saved nigh on $500 for the year. Not bad when you consider the upfront cost isn’t actually as much as you might think.

Saving: $500

Be a savings ninja

Getting started can be hard, finding the time and doing research is at the heart of procrastinating.

Step 1: Take the 60-second quiz – find out if you can save money on your loan.

Step 2: Run an energy check

Step 3: Find out if it is worth moving to LED lights

Step 4: Book a 15 min chat with me to find out if you should be managing your money better. You can find a time below.

Disclaimer: all information contained within this article is of a general nature. It does not take into consideration your personal financial circumstances. Please consult a professional financial adviser (just like us 🙂 ) when making a financial decision.

Michael Chew
michael@orangewealth.com.au

Hi, I'm Michael!I'm a Dad, writer and finance expert.My priority is making the most of what I have for my family and finding the balance between all of life's competing priorities.

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