Saving

Want it all (and all at once)? Tips to save for multiple goals

Do you know what you want – what you really want? And is it more than just one thing? You’re not alone. We had a chat to five people who are all chasing (or have chased) more than one goal at once and crushing it. Find out the techniques and habits they’re relying on to save for their multiple goals, including opening (and nicknaming) an account per goal among other (sometimes surprising!) strategies.

Lisa, 32

I’m aiming to buy a unit or a townhouse this year and then buy a new car shortly afterwards.

I don’t have any fancy saving techniques aside from putting a certain percentage of my earnings into a separate savings account. I’ve got the 20% deposit ready for the property. I’ve recently received expert advice about home loans, discovered my borrowing power, and I’m just waiting for my home loan pre-approval – then I’ll start actively looking. I’ll keep saving on top of the deposit so I can get a car after I buy the house. The idea is that by the time I buy the house, which will take a while, I will have enough to buy the car.

For anyone juggling multiple goals, my tip is to know exactly where your money’s going and calculate how much you want to save for each goal. Be realistic about it and create a timeline for when you want to achieve that goal. Lastly, look after yourself! Set aside money to enjoy yourself instead of trying to be too frugal; otherwise, it’ll be harder to see the light at the end of the tunnel.

Patrik, 46

My savings goals were two-fold. I’m a first-time home builder, so the first goal was to be prepared for unplanned costs of that process. The second goal was to have a buffer for other financial surprises in life. So, in a way, I was saving for the unexpected. And it happened! My car pretty much died on me at the time I was settling my mortgage, but having some cash set aside to get it replaced made the whole thing almost a non-event.

I used three savings accounts and my credit card. First, my salary would go to my regular savings account. For daily expenses, I would use my credit card and then pay it (plus my rent) off in full from that regular savings account each month. Whatever was left over would then go to my short-term savings account. This account was for big one-time expenses (like replacing a dead car or paying a building inspector), but also things like initial deposits for the land I’d purchased and other builder costs. On average, I would aim to keep about two-and-a-half times my monthly wages in there. Anything extra than that two-and-a-half in this account would then go to a long-term savings account that would give me a higher interest rate, provided I didn’t touch it. I was using this long-term account to save for my mortgage.

To maximise your savings without having to change your lifestyle too much, I recommend spending a week or two researching and finding cheaper options for all your fixed costs like insurances, subscriptions and utilities. It worked for me.

Things I wasn’t using, I would cancel. Some of the savings were small, but added together over a year it was almost $2,000 without really doing anything different.

Bella, 22

My first goal was to save for my first home deposit (and I did it!). I knew the home I could afford would be tiny, but that’s all part of the first-home buyer experience. My other main goal is to have a family. Once the babies start coming that’s when I’ll need a bigger car too, so I’ve created separate savings accounts.

I’ve got four accounts within my banking app: I’ve named them ‘house deposit’, ‘rent’, ‘car’ and ‘spending’. I am pretty money-focused and I even have a spreadsheet for my personal life, just like I would when working professionally producing a job (I’m a producer). My partner thinks I’m nuts! Taking smaller steps like meal prepping and not wasting groceries, reducing the Uber usage, and doing more walking or taking public transport has really helped me, too.

I’ve learnt to make sacrifices to save, but my advice is to not go overboard, where you end up feeling down for missing out on life’s highlights.

Marc, 28

My two goals were to buy my first home and buy an engagement ring. And I pulled it off!

I set up multiple accounts and allocated how much I could spend (or save) each month. I was able to put 45% of my salary into a joint savings account with my partner to help us grow a deposit. And for the ring, I set up a new account where I transferred 10% of my salary into it each pay.

I’ve just settled the purchase of the home and moved into it with my partner – we’re both over the moon. As for saving for the engagement ring: I’m on track and ready to buy within the next week. I’m really stoked! 😊

My advice is to break your goals down and keep them simple. Understand the target and do the numbers to see what’s achievable. Time and patience has made it all possible for me.

Saving

My breakup helped me triple my first home deposit savings. Here’s how

Life has a habit of throwing surprises at us, big and small (later, 2020!). A change of job, a change of pace, a change in income, a change in relationship status. These kinds of events can make us ask ourselves: what do I really want (and how am I going to get it)?

We talked to Louise, a millennial who’s had life say to her, “Hey mate, this thing is happening whether you like it or not!” She went through a surprise breakup (ouch!) and responded by shifting her financial (and a bit of her life’s) focus to saving for a house.

Thanks for sharing your story with us. So, what happened to make you focus more intensely on your savings?

A couple of years ago, I was in a long-term relationship and we’d started to save up for our future – specifically, buying a house together in the next couple of years. We were saving and budgeting as a couple, splitting all our expenses – groceries, dinners, drinks, bills – in a really fair and balanced way. I’d even started my first actual, detailed budget that worked for me.

And then… we broke up. It was a real wake-up call for me. I was on my own. I’d been given full custody of my future and my savings, and all those expenses I’d been sharing were loaded onto my shoulders. I now needed to be financially strong and stable on my own.

What did this mean for your savings? Did you have to find a new savings mindset?

Well, it forced me to think about what was going on with my money: what was coming in, what was going out. Paying the rent gave me shelter, going to the gym helped my health, but paying for food deliveries three or four times a week just gave me guilt.

It also made me stop and think about why I was saving up for a home, or even if I wanted to buy one at all, ever. I began to shift my thinking from “I’m saving because I think I want this future with this person?” to “I’m saving because I would love to come home to a lovely place that’s my own”.

Once I understood that, a big part of the shift in how I saved was re-evaluating my income. Simply, if I wanted this home of my own, I needed more money. I love my career and I loved my job, but my salary didn’t cut it. So I found a new job and took on freelance work when I had time so that I could put more towards my deposit and my financial security.

Today, I feel much more in control of my savings. I’ve literally tripled my first home deposit from what I had at the break-up! That feels great. I’ve also organised my bank accounts so I can see exactly where my money is and where it’s going. And I still use the foundations of that first budget I set up when I was with my ex.

Can you tell us how you wrangle your budget and savings?

When my pay comes in each month, I open my budget spreadsheet. In there, I’ve listed all my bank accounts: I call them ‘Everyday’ (for all the daily expenses, including rent), ‘My house’ (an ING Savings Maximiser account purely for my house deposit), ‘Big purchases’ (for one-off things like a new rug or linen set), ‘Holidays’ and ‘Treat yourself’ (for when I want to splurge on clothes and fun times).

I split up my pay by percentage across these accounts. At the moment, I’m putting 20% towards my house and 5% each towards holidays (let’s face it, I’m not going overseas anytime soon), big purchases and treating myself. They’re all ING Savings Maximiser accounts. The leftover 65% I keep in my ING Orange Everyday account for everyday spending, like rent and all my regular expenses. Sometimes I’ll adjust the percentages if I need to pay a car rego payment that month or want to put more away for a long-weekend trip coming up. It’s my budget, so it needs to work for me.

I use the ING app to see all my account totals and all the interest I’ve earnt on my savings accounts. Another thing I’ve turned on is ING’s Everyday round up. Basically, whenever I use my Orange Everyday card to pay for something, it rounds up the amount to the nearest $5 (or you can choose $1) and automatically sends the difference from my Orange Everyday account straight into ‘My house’. So when I buy a $3.50 coffee, I’m putting away an extra $1.50 of my money into savings for my house.

Do you have any advice for someone going through a big change that’s leading them to rethink their approach to saving?

Take the time to pause and think about your savings goals and why you’re setting those goals. They might need to change completely. If you’re saving for a home, is it because you think (like I did) that you’re meant to settle down at some point, or is it that you want the security or joy of owning your first home for yourself?

If you have a clear goal that feels possible, and it matches your values and aligns with what you want in your life, it’s easier to see the steps and decisions you need to make to achieve it.

Saving

Deposit devotion: six tips for getting your home loan savings on track

When it comes to saving for your first home, it can be a challenge to stay the course. But we’ve got your back. Whether you’re already making positive progress or your budget is a bit busted, here are six tips to get your deposit savings on track.

1. Know your outgoings

When you’re going for a home loan, it’s not only about income. A lender (like us) will also look at your expenses in deciding how much you can borrow and whether you can afford it. So it’s important to know what you’re spending money on, big or small – it all adds up.

First, take stock. Look at the past month and compare how much money is coming into your account versus how much you are spending. This will help you get a clear picture of whether you need to cut back, and by how much. Seriously, analyse every transaction. Ask yourself: Were all those purchases necessary? What could you have gone without?

2. Check your commitments

Direct debits and subscription services mean it’s all too easy to sign up and forget about the cost. If you’re direct debiting money into your savings account, great! But what’s not great is paying for something you don’t even use.

When you look at your outgoings, look at all the different types of recurring expenses (like these sneaky direct debits and subscriptions) over the past year, and assess whether you still need them. If you’re not getting your sweat’s worth with your gym membership or you find yourself tossing each issue of that magazine you subscribe to straight into the recycling bin, it’s time to hit ‘cancel’ and put the money towards your first home deposit.

3. Get a better deal on utilities

Gas, water, electricity – utility bills are a cost of living that’s hard to shake. And most of us have insurance for something: like a car, a house or even a cat. It’s easy to fall into the trap of sticking with the same provider for years without comparing what else is on offer. Sure, some people call it laziness. We’ll call it “having better things to do”. But it’s worth taking some time to shop around because it can literally pay off. It mightn’t be as fun as hitting up your favourite online stores for new clothes, but seeking out a better mobile phone contract or car insurance policy could get you closer to your first home. The more you free up for your home loan, the better.

4. Start an emergency fund

About half of all Australians say they run out of money at the end of each pay period occasionally or most of the time. This is risky (and stressy) business, because even a small surprise expense could bring with it a whole lot of extra financial pressure.

But this pressure is unnecessary. An emergency fund can be so freeing. Instead of stressing out when a big bill or surprise expense drops, you’ll know you’ve got that extra cash up your sleeve to cover it. You don’t need to be putting away buckets of bills, either. Even $20 a week will add up to more than $1,000 over the course of a year. That could be a surprise trip to the dentist right there.

5. Pay yourself first

Instead of long-forgotten subscriptions sneaking dollars out of your bank account without you seeing them, imagine that same money slipping silently from your regular account into your savings account and growing your home loan deposit. All it takes is you making saving a non-negotiable part of your financial behaviour by setting up an automatic regular transfer from your everyday to your savings account. And if you can make it land in an inaccessible savings account (to stop you dipping into it when temptation strikes), even better. Our tip is to set it up for pay day – or you could even organise with your employer to transfer a portion of your pay directly to your savings before it even hits your everyday account.

6. Spread money across multiple accounts

We’re totally into this banking technique. It’s all about allocating a certain amount of money to a certain use by opening a savings account for each of those uses and splitting your money across them. That way, you’ll (ideally) use the money in each account for its specific purpose, which can help keep your savings untouched and on track. Three is a good number of accounts (for things like daily spending, bigger expenses and savings) but you might want to add a fourth and call it, since we’re on the topic, “My home deposit”. Spread out your income every pay day and you’ll be on your way.

Saving

Seven budget-friendly ways to keep doing your thing (while saving for a deposit)

Home truth: life as you know it doesn’t need to stop when you start saving for a deposit. It might change a little, but a little change doesn’t have to equal compromising on life’s fun stuff. All you need to do is be a little flexible, a tad wily, and you’ll strike that budget balance. But how? Make being thrifty fun. Let’s take a look at a few ways you can still have a blast while saving for your home.

Set that goal

Okay, okay, okay. This isn’t a trick as such. But it is an important step. Before you get started, you need to know what your target is. Every great achievement starts with a decision to try, and you need something to shoot for. After all, you can’t hit a target you can’t see, and without a goal to achieve you won’t get that good feeling when you get there. So, set a dollar amount for your deposit and a date you want to achieve it by, then go for it.

Gamify date night

For those coupled up and saving for a place together – and hey, even if you’re saving solo – think about gamifying going out. Consider turning a date or bestie catch-up into a game with the aim of having the best time for the least money. Take turns at being in charge of the night and score each other’s thriftiness. Whoever gets the highest total score at the lowest cost after, say, three months (or whatever works for you) wins. What’s the reward? Saving money towards your dream! And then, by allocating a small portion of the money you’ve saved towards something a little more extravagant, like a fancy night out without the thrift and grift, you’ll give yourselves more incentive. Don’t blow the bank, but do reward yourself.

Get competitive

Gamification boosts motivation – there’s even been a lot of scientific studies in this space. So in a similar spirit to gamifying date night, think about stoking the fires of friendly competition. With a good pal, your partner or anyone else you know who’s also saving their little heart out, make it a race. Regularly check in, maybe run a scoreboard tally, and make sure you share your savings wins with each other. After all, a rising tide lifts all boats and all that. When you both meet your goals (woo!) you can celebrate together, too.

Deals, deals, deals

As much as possible, see where you can get a cheaper price. Get hustling. If you’re not hitting up cheap nights at the pub, now is the time. What about good old cheap nights at the cinema? Get on it. Suss out Groupon for various deals. And if you’re looking for an easy way to compare grocery prices between supermarkets, Wiselist is the app for that. And last but not least, make sure you look at deals websites like ozbargain.com.au and catch.com.au. Be thrifty, but make it fun.

Use the power of words

Names like ‘long-term savings’, ‘spending’ or ’emergency’ might not be the most exciting or engaging titles for your savings accounts, even if they’re accurate. So, if you’re doing the multiple account thing and putting your savings in different accounts for different purposes, you could try ramping up your rhetoric. Go with what works for you, but here are a couple of our suggestions: ‘This is to get you through the month!’ for your everyday spending, or even ‘Spend only $20 of this per day, okay?’. Then there’s ‘DO NOT TOUCH’ or ‘Dream Home’. For an emergency account, what about ‘Wee-woo wee-woo’, just for the lols?

Think about savings as secret money

When you put your money out of sight into your savings, it can feel like it’s been spent. Remind yourself: it’s simply tucked away somewhere safe, ready for a triumphant return as the deposit that gets you your first home. One trick to keep on track could be to visualise your saving’s higher purpose: use your imagination to imagine your ideal home, terrazzo tiles and all. That’ll surely get you motivated. Visualising getting there makes you feel good, and the more something makes you feel good, the more you’ll want to do it.

Spreadsheets aren’t for everyone (and that’s okay!)

Whatever you do, do you. Don’t fake your love for spreadsheets if you find them clunky and disengaging. Instead, try sticking reminder notes in places you’ll see them regularly (hello, bathroom mirror), tracking your budget balance or downloading an app for savings and of course your ING app for managing, and naming, your multiple savings accounts. You could even scribble reminders on the back of your hand. Heck, get a stick-and-poke tattoo of $AVE CA$H across your knuckles, if that might work for you.

Do it your own way

Final tip: don’t worry too much about the how. Take these ideas as inspiration and pick and choose what works for you. You can get there any way you like – what’s important is that you do.