Five ways to save money during a recession
Emmanuel Guignard, Senior Home Loan Broker and Director at Loanscope, offers some advice on how to save money during difficult economic times without sacrificing all the pleasant things in life.
Rising costs are affecting everyone globally and paying close attention to expenses is the sensible thing to do right now.
With costs most likely to rise even further, now is the best time to take charge of your finances and make savvy money moves.
Emmanuel Guignard, Senior Home Loan Broker and Director at Loanscope, said saving money need not translate into a frugal lifestyle devoid of treats and enjoyable activities.
Here are five ways to save money during a recession:
1. Consolidate debt
“Focus your efforts into paying high–interest debt, and consolidate debt to lower your interest,” Mr Guignard said.
It might seem counterintuitive to pay money to save money but multiple debts, such as a home loan, car loan, or credit card debt, incurs an array of extra expenses. By consolidating debt, the overall amount of interest paid can be significantly reduced.
Consolidating debt also brings the added advantage of simplifying the payment schedule, so there will never be a missed payment that diminishes your credit rating.
2. Pay attention to your daily spending
Now is a good time to assess where your money goes. After paying bills, rent or making mortgage repayments, what do you spend your money on?
We spend a lot of money on food. Are you ordering too much takeaway? Do you buy coffee every morning? Do you eat out regularly? Are you throwing out a lot of food? When are you doing your grocery shopping?
By answering these questions, you can better asses if you’re spending too much money on food and then figure out simple ways to alter eating habits and routine to allow for a cheaper (and perhaps healthier) way of eating.
3. Assess your subscriptions
What are you paying for on a weekly and monthly basis? Do you have a gym membership you don’t use anymore (but you keep on paying because you’ll go again one day)? Could you consider giving running a go? Do you have five subscriptions to streaming services? How about alternating them each month?
By making a list of your subscriptions, you might find that you are paying way more than assumed. It’s common to find forgotten subscriptions that are still chipping away at the bank balance.
When it comes to income, diversification is key. The saying “don’t put all your eggs in one basket” rings true in every area of your life, but it’s essential when it comes to money.
Do you only have one job generating income? Could you be making money elsewhere? Do you have a hobby you could transform into a side hustle?
What about your investments? Do you have an investment portfolio? How can you diversify that?
“Make sure your investments are spread across various investment vehicles, such as real estate and stocks,” Mr Guignard said.
5. Build an emergency fund
Do you have savings? The rule of thumb is that in case you’re losing your job tomorrow, you should have enough money to survive a minimum of three months.
Ideally, that money should be in a separate savings account that you don’t touch unless you’re in that situation. If you don’t have that money, how can you fast-track your saving process to get the account going as soon as possible? Do you have anything you already own that you can sell online? Can you pick up a bit of freelance or contract work on the side for a short time?
By thinking creatively, you can find simple ways to build your emergency fund and build a secure future for yourself.
Time well spent
The message from these five tips is that you can still do what you want to do – eat well, watch what you want, exercise regularly – but be smart and mindful about it.
Take this moment as an opportunity to assess your finances, rethink your relationship with money and ultimately, make empowering decisions for your future. Small changes will make a big difference to your savings.
For more information or to secure your next home loan visit the Loanscope website, www.loanscope.com.au.