Saving

[wadistance]

instead of creating a new thread I just thought I would throw it out there - how much do you put away per week on your income?

I find I put away roughly 20% in savings, spend 20% on rent, put about 20% on my credit card (which I need to get rid of) and then the other 40% is for day to day, bills and incidentals.

Anyone else want to do a breakdown, and/or advise me if you think I could do more/less? Would like some differing opinions. My partner is a massive saver/hates spending, and I used to spend heaps but she's curbed it a bit

 

[Oraaaaazio]

instead of creating a new thread I just thought I would throw it out there - how much do you put away per week on your income?

I find I put away roughly 20% in savings, spend 20% on rent, put about 20% on my credit card (which I need to get rid of) and then the other 40% is for day to day, bills and incidentals.

Anyone else want to do a breakdown, and/or advise me if you think I could do more/less? Would like some differing opinions. My partner is a massive saver/hates spending, and I used to spend heaps but she's curbed it a bit

Stop putting the money in savings and start putting that money on the credit card debt instead. No savings account will pay you interest at the rate you're paying it on your credit card.. the sooner you pay that off, the better.

 

[wadistance]

Stop putting the money in savings and start putting that money on the credit card debt instead. No savings account will pay you interest at the rate you're paying it on your credit card.. the sooner you pay that off, the better.

It's all interest free - did a balance transfer after my euro holidays last year, decided to just go large for a few weeks before I started FT work, will easily nab that off before the end of the interest free period

 

[Long Live HFC]

yeah gotta agree with the above. saving is great, but the returns atm are worthless. pay the credit card off (even if it is at 0%- i did the same for years lol).

 

[Mootsy]

Hey, get this...

Back in 2005, early 2000s, interest rates for saving were around 6-7%

 

[George Washington]

Hey, get this...

Back in 2005, early 2000s, interest rates for saving were around 6-7%

What was inflation?

 

[SHOGUN_31A]

Yeah not entirely true. Find a planner who helps set you a spending and savings plan aligned to your financial and lifestyle goals, and then mentors and keeps you accountable on a weekly / monthly basis and see the value they add, positive difference they make.

If the under 50 demographic don't require a planner, why are so many young ones struggling to purchase a house or up to their eye balls in credit card debt?

Problem is most planner don't focus on cash flow, which I believe has the biggest influence in someone achieving the goals, so the issue is finding one has has the model and capacity to do so.

I agree that cash flow is super important. Small business operators with volatile and lumpy income streams need to be particularly vigilant relative to the average wage/salary earner. But I don't think planners have much value add outside of advising on tax efficient vehicles for those with substantial wealth.

For most people, earning a decent wage the best advice is often to save "conservatively". This is difficult to define as it can mean many different things depending on your current status and your goals (e.g. a renter trying to save for a deposit; current mortgagee; someone content on renting forever; dependents;...). But if you're on a reasonably average income, you should save enough so that you know you're saving.

Another consideration for your saving is that most people hate downside risks (e.g. getting sacked and being unemployed for an indeterminate time) much more than they value upside risks (e.g. getting a promotion or a phat bonus). If you are one of these people, then your savings should also cover these "rainy day" type events, at least in part. The two best ways for most people to build this stock pile is: (i) salary sacrificing into superannuation (which can be accessed under hardship circumstances, albeit with some lag)-- and even an additional $50 per week will make a huge difference over time; or (ii) if you've got a mortgage, putting the money in an offset account, though this requires much more self discipline.

For perspective, I'll give me on story. I'm currently on a slightly above median income, but I salary sacrifice $30k per year (the max that can be salary sacrificed tax free). This is 'painful' for me at present, despite saving me paying around $10k in tax per annum, and a lot of people would consider this saving ridiculously conservative. But there's no way I'm living off the pension if I'm alive in retirement. The standard 9.5% super contributions rate is no where near enough to ensure the lifestyle I want to lead in retirement. And, for perspective, the full pension is around 25% of the average wage, not exactly a great lifestyle.

 

[SHOGUN_31A]

What was inflation?

Within the Reserve Banks target of 2-3%.

Interest rates for saving at that time were only that high for longer-term term deposits (though all saving rates were higher, after inflation)

 

[kickazz]

On saving in general, a tip for credit card use - I think they are convenient but you can easily drop 50 here, 200 there without thinking about it.

When I went through a phase of tightening the belt, I bought a book of raffle tickets and tore out an 'amount' to spend each week. For example you could allow 100 a week and use ten tickets to represent this.

Then you put those in your wallet and whenever you spend on the card you physically dispose of the correct number of tickets (rounded off) You can even tear one in half if you want greater accuracy.

It's more a psychological hack than anything, but it does two things - gives you an idea of how much you are spending as you go instead of waiting for a statement, and I found it did make you think twice about simply whipping out the plastic everythime you thought you wanted to make that discretionary purchase, those tickets in the wallet being more tangible than some running total that you don't really recall and don't want to know about until the bill arrives!

I did this for a while, and when I later checked back statement saw that my spending was cut a fair bit.

 

[Mootsy]

yeah, especially with pay wave, it is easier to spend more cashola in spurts..

 

[Scotland]

I don't spend any more money since PayPass has come along than I did before it existed, I just go to the ATM less often and have fewer coins.

 

[Scotland]

Yeah not entirely true. Find a planner who helps set you a spending and savings plan aligned to your financial and lifestyle goals, and then mentors and keeps you accountable on a weekly / monthly basis and see the value they add, positive difference they make.

If the under 50 demographic don't require a planner, why are so many young ones struggling to purchase a house or up to their eye balls in credit card debt?

Problem is most planner don't focus on cash flow, which I believe has the biggest influence in someone achieving the goals, so the issue is finding one has has the model and capacity to do so.

Young ones struggle to buy houses because houses are very expensive. Having a planner isn't going to change that.

If you need to employ someone to tell you to spend less than you earn, don't borrow large sums of money to buy depreciating assets etc. then you're going to struggle in life.

 

[BIRDBRAIN]

What is a planner going to say to a chick who has a new car on finance, is 5K in CC debt and has just booked an overseas holiday after taking out a personal loan? There's no stopping her, she's already announced it to facebook.

 

[tige19]

Yeah not entirely true. Find a planner who helps set you a spending and savings plan aligned to your financial and lifestyle goals, and then mentors and keeps you accountable on a weekly / monthly basis and see the value they add, positive difference they make.

If the under 50 demographic don't require a planner, why are so many young ones struggling to purchase a house or up to their eye balls in credit card debt?

Problem is most planner don't focus on cash flow, which I believe has the biggest influence in someone achieving the goals, so the issue is finding one has has the model and capacity to do so.

This is a ridiculous post..

The inflation in house prices in Melbourne and Sydney in particular is much greater than what those that are trying to save can save. Victoria is also the highest taxed state, no concessions for first home buyers unless you're building or buying a brand new property. Buying a house is certainly achievable but it's getting harder and harder.

 

[Scotland]

What is a planner going to say to a chick who has a new car on finance, is 5K in CC debt and has just booked an overseas holiday after taking out a personal loan? There's no stopping her, she's already announced it to facebook.

'Find a husband before you lose your looks'

 

[Power Raid]

What is a planner going to say to a chick who has a new car on finance, is 5K in CC debt and has just booked an overseas holiday after taking out a personal loan? There's no stopping her, she's already announced it to facebook.

talk about hitting rock bottom (financially) and still digging deeper

 

[Jcpdragonx]

Once I got my own car it all went downhill. Savings after each paycheck went from 80% to about 15%. Looking at how much I earn't this year compared to what I've saved is depressing.

 

[Scotland]

Car loan I presume?

 

[Jcpdragonx]

Car loan I presume?

nah... just try to get out the house as much as possible since i couldn't do that without a car. i've got rid of useless hobbies like video games and only watched 1 tv show this year, all i really do for fun when i get home is read autobiographies, bigfooty, facebook and text people who are hopefully in the mood. drives me insane being home. spent $600 on tennis racquets (i dont need to spend this much), ****ing 21st birthdays $50 each (hardly had any this year but had 5 birthdays in october), spent a fortune on food at any given time and a lot on protein bars. physio probs $500. town is a killer but ive cut down, can easily blow $100 on entrys and 2-3 drinks. then there is phone which are about $130 a month together, gym membership and rego etc.

It's all coming to me now where its all gone but going out for food is probably the real killer. Have had 61c in my account since friday because I forgot phone direct debit. Living on cereal/bread/veggies till payday

 

[kickazz]

nah... just try to get out the house as much as possible since i couldn't do that without a car. i've got rid of useless hobbies like video games and only watched 1 tv show this year, all i really do for fun when i get home is read autobiographies, bigfooty, facebook and text people who are hopefully in the mood. drives me insane being home. spent $600 on tennis racquets (i dont need to spend this much), ******* 21st birthdays $50 each (hardly had any this year but had 5 birthdays in october), spent a fortune on food at any given time and a lot on protein bars. physio probs $500. town is a killer but ive cut down, can easily blow $100 on entrys and 2-3 drinks. then there is phone which are about $130 a month together, gym membership and rego etc.

It's all coming to me now where its all gone but going out for food is probably the real killer. Have had 61c in my account since friday because I forgot phone direct debit. Living on cereal/bread/veggies till payday

Dude, actually knowing where it all goes is half the effort with saving I recon. From there you can least start to decide which things are worth the money and which are not.

 

[Power Raid]

nah... just try to get out the house as much as possible since i couldn't do that without a car. i've got rid of useless hobbies like video games and only watched 1 tv show this year, all i really do for fun when i get home is read autobiographies, bigfooty, facebook and text people who are hopefully in the mood. drives me insane being home. spent $600 on tennis racquets (i dont need to spend this much), ******* 21st birthdays $50 each (hardly had any this year but had 5 birthdays in october), spent a fortune on food at any given time and a lot on protein bars. physio probs $500. town is a killer but ive cut down, can easily blow $100 on entrys and 2-3 drinks. then there is phone which are about $130 a month together, gym membership and rego etc.

It's all coming to me now where its all gone but going out for food is probably the real killer. Have had 61c in my account since friday because I forgot phone direct debit. Living on cereal/bread/veggies till payday

the modern lifestyle of mobiles, internet, pay tv (if one has it), insurance, medical insurance is all designed to keep people poor. I really don't know how young people ever get to save money as these almost feel necessary from a pretty early age these days.

I sense you are heading i a really good direction and on top of your budget/ savings regime. My only advice is remember you are young and enjoy it (the beers, gym etc suggest you do), so feel more relaxed about the savings at this stage. If you can, focus on increasing income.

I know this will sound a little derr but it is easier to save when you income increases. So whilst your young, plan on how to increase your income more than planning on how to save. That may mean simply mean saving and investments, it may mean studying or simply sitting down with the boss and setting targets and bonuses.

 

[Jcpdragonx]

the modern lifestyle of mobiles, internet, pay tv (if one has it), insurance, medical insurance is all designed to keep people poor. I really don't know how young people ever get to save money as these almost feel necessary from a pretty early age these days.

I sense you are heading i a really good direction and on top of your budget/ savings regime. My only advice is remember you are young and enjoy it (the beers, gym etc suggest you do), so feel more relaxed about the savings at this stage. If you can, focus on increasing income.

I know this will sound a little derr but it is easier to save when you income increases. So whilst your young, plan on how to increase your income more than planning on how to save. That may mean simply mean saving and investments, it may mean studying or simply sitting down with the boss and setting targets and bonuses.

increase income over increasing savings, i like it. do you know any good books to read on investing? or any tips? i remember i read somewhere that the most common self made millionaires are investors. as a 21 year old i just want to shut up and learn (i learn't that in chris judds book hehe). im looking at a unit for $325k which guarantees $400 per week rent for the first 2 years, but then will go down to $280-$300. have 60k deposit ready, so id need to borrow 265K. property market is always a worry but it sounds good on paper. a bit off topic sorry but id appreciate any feedback even if short.

 

[Long Live HFC]

this thread made me do some quick arithmetic, and between car parking, buying lunch every day and my red bull addiction, my current job is costing me $8K/year! stupid job

 

[Power Raid]

increase income over increasing savings, i like it. do you know any good books to read on investing? or any tips? i remember i read somewhere that the most common self made millionaires are investors. as a 21 year old i just want to shut up and learn (i learn't that in chris judds book hehe). im looking at a unit for $325k which guarantees $400 per week rent for the first 2 years, but then will go down to $280-$300. have 60k deposit ready, so id need to borrow 265K. property market is always a worry but it sounds good on paper. a bit off topic sorry but id appreciate any feedback even if short.

the reality is investing by yourself can be difficult and investing through managed schemes are usually just average.

I think your first investment should be property and it should always be a cheap one. Why cheap? property is a crap investment but it is recognised by banks, so you can leverage against it to buy and then leverage against to invest elsewhere. By buying a cheap one, you can very quickly get on top of the investment and create positive equity and generate a return which looks after the costs.

Once you have some capital and start moving in circles (family, friends, networks) with other people with capital, then your opportunities really start to open up. Banks hate lending to anything but property and the managed funds are too big for SMEs. This creates a massive opportunity.

By funding these businesses you can generate all types of returns depending on the situation. Take a listed SME, you can lend for 18 months at 10%, clip a 2-3% establishment fee and lock in a price to convert to equity. So on an 18 month investment you could generate 11-12% yield pa plus have an equity kicker which could generate an additional 20-50%. 35% pa is normal.

SMEs could include property companies with massive land banks. At the beginning of the GFC these land bank companies forced to by banks to tidy up their lending ratios. By having a balance sheet, we were able to "acquire" massive parcels and only settle once we sold the properties ourselves. The banks were happy as they got the ratios right, the land developers were happy as the banks didn't wind them in and were happy as we netted 35%-85% returns in 9 months.

Another real opportunity live at the moment is the TPP agreements where governments can now be sued for stealing assets. These protocols have been in place in Oz for decades but very new for third world nations. By funding the litigation, 30% returns would be normal and relatively risk free as it is essentially backed by the world bank.

 

[George Washington]

30% returns... risk free

Lets not get ahead of ourselves here..