How to live a champagne lifestyle on a beer budget
Kate's guide to saving for a European holiday
27/01/2017 Kate Elliott, Marketing Manager
New year, new me. We’ve heard it all before – the strike of midnight on New Year’s Eve inspires grandiose plans for health, fitness and savings goals. But how long do they last?
I’ve never been one to stick to my resolutions unless I have a firm goal in mind – a SMART goal: specific, measurable, action orientated, realistic and time bound. Things like ‘save more money’ or ‘lose weight’ or ‘eat better’ fall on deaf ears with me. But if I can lock in some specific goals, I know I can nail it – take that half marathon I smashed in Melbourne in 2015. Boom! But since then, I’ve just been plodding along and have lost my way in the running stakes. Without a new race in mind, I’ve lost my mojo and have no direction.
I’ve been like that with saving money – a terrible admission from an employee at a financial services firm! If I have something to save for, I can focus and commit. But if it’s just a matter of ‘putting it away for a rainy day’ . . . it doesn’t stick.
So finally I have something to save for – a European holiday in May. Jealous? You should be!
It’s reassuring to have a goal in mind and part of the process of reaching your goals is to share them with family and friends so here I find myself tapping away on the keyboard to motivate me and keep me on track.
Allow me to present: Kate’s tips to saving for Europe!
Don’t spend gold coins
I’ve stopped spending gold coins and only use notes for incidental purchases like sushi lunches, coffees etc. The beauty of it is that it creates more savings through spending notes. Make sense? For example, if I order a $3.80 coffee, I’d normally use two $2 coins to pay for it (i.e. $4). These days, I’ll ignore the gold in my wallet will reach for a $5 note instead. This will gift me a $1 gold coin in change to add to my existing bounty of four dollars. So in my warped head, I’ve actually made five dollars in the process! All my gold goes into a money box at home and sure, while it won’t pay for my flight to London, it might pay for High Tea at Claridge’s!
Don’t spend money on transport when you can walk!
Public transport is an area I can definitely save on – I live close enough to the city to walk to work, so I do! A weekly Myki pass would cost me $41 so now I just top up with Myki money and I probably only go through $20 a fortnight or so when I need it on weekends. I’m also on the uber bandwagon but not without my research – always make sure you do a fare estimate before booking a ride. I found it was cheaper to order a taxi to the airport before Christmas than it was to book an uber.
Bring in your lunch from home
I know it seems so commonsense, but it really is so much cheaper to bring in your lunch from home. I’ve made a concerted effort lately and have been eating like a king. Sure, I still need to buy ingredients but it’s only a fraction of the cost of five days’ worth of store bought salads or sandwiches. Fear not, I still do splurge and if I join my workmates for a Friday lunch out, I’ll dig into my gold coins and pay for it with those savings.
Reduce your mortgage repayments
The beauty of working at a financial services firm is that I have experts sitting only metres from me. I caught up with Brian Godfrey, Mortgage and Finance Adviser, to ask if I could use my mortgage to help me save for my holiday. He talked me through my redraw options and how I could take a lump sum out just before I jet off, but we agreed that I’m someone who needs to be motivated by a growing account balance so that wasn’t going to work for me. I’m paying slightly more than my minimum repayments, so he suggested reducing my repayments to cover only what I have to, and funneling that extra money into a separate account purely for the sake of watching it increase over the next few months. Once I've hit my target, I can up my repayments again.
I’m no expert, but Brian knows his stuff so if you’ve got questions about your mortgage, drop him a line.
Separate your savings
On the topic of funneling that extra money into a separate account, I cornered our Associate Financial Planner, Brendan Peach, and asked him what I should be doing to make the most of my savings in a short time. He said that in an ideal world, we’d be looking at a 5-7 year strategy but given my looming deadline of only a few months, my best option was to consider a high interest savings account or a term deposit. A normal bank account might only offer 0.1-1.5% return but some specific savings accounts could promise anything up to 2.6% with extra incentives if you make regular payments.
I settled on an online high interest savings account over a term deposit on this occasion because the time period suited me better. Term deposits are normally set for 1,2,3,6, or 12 month periods, so my holiday deadline of five months would require me to invest for three months then redo for another two months. Too messy. So I’ve set up a weekly direct debit to an ‘online’ high interest savings account that offers me a better rate than my everyday banking account, and can be accessed whenever I like.
Do you have longer term savings goals to meet? Speak to Brendan about what financial strategies could best suit you and your situation.
Have a realistic goal in mind
I had no idea how much I was capable of saving in the lead up to my holiday – which meant I didn’t know what weekly allocations I had to make to these savings. So I have plugged in the figures using a savings goal calculator and now feel calm in the knowledge that my weekly contributions are going to allow for a diet of more than just bread and cheese in Italy!
Monitor your spend
I have never really had a budget and had no idea where all my money went – I just knew it was all gone at the end of the pay cycle. Enter Rachel Williams, Director of Accounting, who – like a fairy Godmother – has plugged in all my accounts to an online budgeting and cashflow program and is helping me to monitor my spend and analyse where all my money is disappearing to. We’ve been able to look at my incomings and outgoings and worked out I’m spending far too much on my ‘gifts’ and ‘eating and dining out’ budget lines. This transparency has made me so much more aware of where I’m overspending and where I can cut back.
Get in touch with Rachel to find out how you can get a birdseye view of your cashflow situation.
Buy in bulk
As a single girl in a small one bedroom flat, I haven’t had the pleasure of a Costco shop yet but I’m assured it’s life changing. On the same theme, I’ve found I’ve been able to save money by buying boxes of wine, rather than dashing in to a bottle shop on the way home from work. While it is a big cost to outlay upfront, it is cheaper per bottle and it almost feels free when you grab one from the shelf on the way to a friend’s place for dinner!
Change the way you socialise
I’ve had to set my boundaries with my friends this year and change the way we socialise. Rather than indulge in expensive dinners and trendy wine bars every week, I’m now catching up with friends over $2.50 takeaway coffees (thank you Entrecote!) and a lap of the Tan. I’m also doing a lot more breakfast catch ups rather than dinners as they rarely involve alcohol (which keeps costs down), normally only include one course and mean you can skip lunch.
Another fun outing that is a cheaper alternative to a night at the pub is Laneway Learning. I’ve done a heap of their classes and really enjoyed learning a new skill with a friend – or perhaps meeting someone new on the night. At a cheap and cheerful $14 per class, I’ve had fun with friends at cheese marinating, yum cha appreciation and posey making workshops!
So there you have it! How I’m trying to live a champagne lifestyle on a beer budget whilst saving for my European adventures. It doesn’t have to be all tuna and rice . . .
If you’d like to speak to an expert at The Hopkins Group about your savings goals, give us a call on 1300 732 082 or drop us a line. Likewise, if you have any travel tips for the Amalfi Coast, Kate would love to hear about them!
Disclaimer: Brendan Peach is an Authorised Representative and John Hopkins Financial Services Pty Ltd is a Corporate Representative of WealthSure Financial Services Pty Ltd Level 1 190 Stirling Street PERTH WA 6000 ACN:130 288 578 AFSL: 326450.
General Advice Warning: This advice may not be suitable to you because it contains general advice that has not been tailored to your personal circumstances. Please seek personal financial advice prior to acting on this information.
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