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How to Save 10000 Dollars
Post Carbon Australia
Meeting your personal financial goals requires a high level of self discipline and planning. If you can make a good personal financial management plan and then follow it successfully, then there is nothing stopping you from meeting your financial goals.
In this article, we will try to simulate a situation where you are going to target saving $10,000 in a year. So how are you going to go about it? It is suggested that before you read further, sketch a rough plan first and then compare it with the plan that we are going to suggest.
First of all you will need to consider your salary and saving potential. If you want to save $10,000 in a single year, it is best to break this big amount down into smaller chunks. So $10,000 over 12 months are equal to roughly $834 per month. All of a sudden the target looks more achievable. So you will need to save at least $834 per month to meet the annual goal of $10,000.
Now you need to consider your income. Everyone reading this article is going to have a different income scale. We are going to take the medium income in Australia and use it as our benchmark.
According to different sites that we have searched, the median salary in Australia is roughly $89,000 per year. If we divide this down to monthly basis it comes down to roughly $7416. This means that from your monthly income of $7416 you will have to save $834 per month.
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Let us do some maths now. $834 is approximately 11.24% of $7416. This means that you will need to save at least 11.24% each month. Is this too much or too high? According to Canstar, the average household in Australia saves around 10% of their income.
This graph shows the savings rate for the average Australian household over last two years. It can be seen that the savings rate climbed up to 22% during the peak of the pandemic. What this shows is that the average household can, without making a lot of lifestyle changes, easily double their savings rate.
So if your aim is to save $10,000 per year, all you need to do is to achieve a 11.24% savings rate which is not very high compared to the average savings rate in Australia.
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How to Increase The Savings Rate?
The saving rate can be increased in a number of different ways. To start off, you should make a budget. We have repeated this advice so often now that the old readers of the blog must know this by heart.
Start off with a budget because your budget is going to help you identify your basic spending and saving rate. Your budget will also help you identify key areas where you can cut down your spending.
Once you have figured out your spending and savings rate, you will get a baseline to work from. Let us assume that your savings rate is around 8%. This means that you need to increase it by roughly 4% to meet your savings goal. This means that roughly you will need to increase your savings by $300 to $400. We are not doing exact maths here because every reader is going to have a different income level.
Now you will need to do your budget and see which items of expenditure you can cut back to start off with. If you have made your budget properly then your expenditures should be listed in the order of priority. With your mortgage, utility and debt payments ranked higher followed by low priority or flexible expenditure such as grocery, discretionary expenditure, holiday expenses etc.
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You should start off with the low priority items first because this is where you can easily reduce your expenditure. According to a research by ING, Australians spend about $860 on impulse purchases annually.
You can aim to cut down your impulse purchase spending down to 50% doing so will save you roughly $400 annually.
Apart from this you can look at some of your other expenditures. For instance if you eat out every weekend. You can start off by skipping alternate weekends. If your saving needs are greater then you can reduce your eating out habit further and opt to cook your meals at home. Cooking meals at home is cheaper and if you have got a savings goal to achieve then you need to look at every possible ay to achieve that goal.
In addition to this, try to change your lifestyle choices. If you still pay for cable TV subscriptions then it is time to get rid of it. You can watch news over the internet and you have got Netflix, Amazon Prime and all other streaming services for your entertainment. It has been observed that switching over to streaming services from cable TV subscription can save almost 90% of the money spent on cable subscription.
More Information : https://www.australiaunwrapped.com/how-to-save-10000-dollars-in-one-year/