6 easy ways Millennials can save money

Money Management -

Buying a house is as simple as forgoing avocado on toast, right Millennials? Not quite. Here we look at six saving hacks that actually work.

Millennials have infamously been told that buying a house, or saving for major life goals, is as simple as forgoing smashed avo on toast. 

Surprise: “Cutting out your avocado toast is not the silver bullet,” says Ray Jaramis, Head of Advice at Pivot Wealth and the Independent Financial Advisers' 2018 Young Adviser of the Year. 

So what are some strategies for younger Australians looking to purchase a property or start an investment portfolio?

Here are Jaramis' top tips. 

1. Don't rely on will-power, have a system

You have finite will-power credits each day, says Jaramis.

“Your alarm goes off and you only press snooze once, you have the healthier milk for breakfast, you exercise on the way to work, but you've only got so much will-power each day,” he says. 

“If you don't have a system around money, you run the risk of using your will-power credits on money.”

2. Build barriers to spending

One system is to build barriers to spending, says Jaramis. 

“People tend to get paid into their spending account and save what's left at the end of the month,” he explains. 

“But we found that doing the opposite is so much more powerful – get paid into an account that has no card access and is with a different bank to your spending account. Then pay yourself a weekly or fortnightly allowance.”

3. Review your spending

How much “allowance” you pay yourself will depend on your income, expenses and savings goals.

Jaramis recommends adding up your expenses over the past three months (to account for all your quarterly bills), and then break that down into a weekly or fortnightly average. 

“If you're not happy with what's left over then it's time to rethink how you're spending your hard-earned,” he says. 

Then regularly review your spending. 

“Put time in your diary every fortnight or so to look at your money – all too often we sit down with clients and hear how surprised they are about where their money's going,” Jaramis says.  

4. Skim some off the top

You can have your avocado toast and eat it too! 

“One hack is to give micro-investing and micro-saving solutions a go,” says Jaramis. 

“There are a growing amount of different savings and investment apps like Raiz or ING Everyday Round up where, if you spend $6.70 on your avocado on toast, they take $7 out of your account. That way 30 cents goes into a savings or investment account.

5. Set goals

“Saving sucks without a target,” Jaramis admits.

So it's really important to give yourself short-term and long-term targets, and reward yourself for those quick and early wins. 

“Think about what makes you happy, what you value. Going away every year on a lovely holiday, that is what I find people get the most amount of happiness from – the big ticket stuff. The muffin you order with coffee in the morning isn't really what it's about,” Jaramis says.

6. Start today

Rather than getting caught up on finding the most perfect, gold-standard solution, just get started, advises Jaramis.

While you may not be able to enter the property market now, investing your money where it will reap the benefits of compounding interest means it will still be put to good work.

“The best time to start saving is ten years ago,” says Jaramis. “And the second best time is today.”

Having put in the effort to save, you don’t want to see your hard earned funds drained should something happen to you. Having the right protections in place can mean you don’t have to divert your savings or change your goals. TAL provides Life Insurance, Income Protection Insurance, Total Permanent Disability Insurance and Recovery (Trauma) Insurance to help protect you against whatever life throws at you. 

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Investing involves risks. It is important that you understand and consider these risks and seek professional advice prior to making investment decisions. The comments provided in this article with respect to investing are the opinions of the individuals quoted. TAL Direct Pty Limited does not provide any advice or dealing service in relation to investing in the stock market or any managed investment scheme.

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