Tips for millennials: Saving on a low income
For young Australians that dream about buying their own property, the cost of doing so can seem like an impossible challenge. Not only will aspiring buyers need to save up enough money to pay for their deposit and secure a home loan, but the amount required to do so has increased alongside property prices.
This can be tricky if you’re only just entering the workforce on a low wage, but it is possible to start putting aside a little bit of money once you’ve started working, regardless of your income. So, let’s take a closer look at a few strategies that could potentially help millennials entering the workforce save more.
Create a budget
The very best way to maximise your savings on a low income is to work out a precise budget that takes all of your expenditures into account. Taking a few hours to define exactly how much you need to spend each month on necessities such as accommodation, food and any other essential bills will give you a clear idea of how much you can save in a best case scenario. Once you’ve got this information, it’s far easier to identify any areas where you might be able to save money by cutting out unnecessary spending.
A budget also makes it far easier to set realistic goals. For example, if you know that you’ll have $1,500 left over at the end of each month, you can allocate a portion of that to go directly into savings, which ensures you won’t be setting unrealistic expectations that you may not be able to maintain over a year.
Avoid unnecessary debt
One of the big problems that young Australians face when trying to build up their savings account is accruing unnecessary debt. One of the most common ways that this can happen is by not using a credit card properly, and only paying off the minimum amount each month, rather than the entire balance. This may help you save more money, but over the long term you may end up with a large amount of debt that will need to be paid off further down the track. With the accrual of interest, this debt can continue growing until it’s paid off, so it’s a far better idea to simply pay off all of what you owe at the end of each month.
One alternative to a credit card that helps young savers avoid racking up debt is a Visa debit card. This provides all of the same benefits such as contactless payments and online transactions, but without the possibility of spending money that needs to be repaid later.
Look for shortcuts
If you’re hoping to save money while young and on a low income, it’s important to take advantage of the various benefits available to you. This could be something as simple as a concession card for public transport, which may not seem like it makes a big difference, but can really help over time. Similarly, if you’re a student working part-time, there are benefits such as special fee-free bank accounts available that can provide a savings boost.
Lastly, as an Australian resident on a low income, you’re eligible for a tax offset of $445 if your income is $37,000 or less. This offset reduces as you earn more. Look to take advantage of this offset so that you maximise the amount of money that goes to your savings.
For more information on saving and banking, contact the team at Beyond Bank today.