5 Practical Money Saving Tips You Can Put to Use Right Now
Being smart with your finances is an important life skill. If it’s one you’re yet to master, then you need to start making some positive changes to your financial behaviour. Simple tasks such as researching different financial products, asking for a better interest rate or setting up automatic transfers into a high-interest savings account are a few ways you can regain control of your finances.
To help you get back on track, and to better manage your finances, here are some money-saving tips you can start using right away.
1) Make extra repayments on your mortgage
If you’re in a position to make additional repayments on your mortgage, this is something you should start doing immediately. The amount you can save by making overpayments on your loan is immense. On a $550,000 mortgage at 5.5% interest, if you put an extra $200 towards your loan each month (starting at year 5), you’d save $58,492.99 on interest payments over 30 years and you’d pay off your loan 3 years earlier.
Try to get into the habit of doing this every month if you can, otherwise do it whenever you have some spare cash. If your home loan provider doesn’t allow you to make extra repayments without penalty, consider switching to one that does.
2) Consolidate personal debt
Consolidating debt is another money-saving tactic that can quickly improve your financial situation. If you’ve taken out several personal loans and credit cards, you may want to consider consolidating your debt and combining all of your loans into one. This strategy also allows you to benefit from lower interest rates and fewer fees. Just make sure you don’t get stung with any early payout fees from your existing loans.
3) Reduce your credit card limit
If you’re struggling to repay your credit card debt and you have several credit accounts going, you should try to lower your credit limit. This will eliminate the temptation to put more purchases on your credit card, which will help you to get out of debt sooner.
4) Haggle for a better deal on your financial accounts
Having the confidence to negotiate for a better deal on your accounts is another way you can generate savings. Whether it’s asking for a better interest rate on your mortgage, seeing if your electricity provider can beat a competitor’s price or even asking your bank to waive an account-keeping fee, there are many ways you can negotiate a better deal.
Even negotiating for a 0.25% discount on your home loan could enable you to save thousands of dollars over the life of your loan.
While it may not come naturally to you, negotiating for a better deal is a great way to secure savings and ensure you’re getting the best value for money.
5) Prioritise high-interest debt
If you have a large amount of outstanding debt across different financial products, it can be difficult to know where to start and which debt to pay off first. While you should always meet the minimum repayments for all your loans, if you have any extra cash, you should focus on paying off high-interest debt first.
For instance, if you have a personal loan with a 10% interest rate and a credit card with a 15% interest rate, you should focus on paying off your credit card bill first, as this will enable you to lower your interest payments.
Remaining in control of your finances is critical to ensuring the financial (and emotional) wellbeing of you and your family. Follow these steps to get into better money habits and to fast-track your way out of debt.