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Module 1: Kicking goals

“By failing to prepare, you are preparing to fail.”

Thomas Jefferson

Tippla is a tool that helps Australians to access and understand their credit scores. We are not financial advisors. We work with a range of industry professionals and compliance check our content to ensure factual accuracy. We do not provide professional financial advice. Consider seeking independent legal, financial, taxation or other advice to check how the information in this lesson relates to your unique circumstances.

Introduction 

Putting savings aside is an investment in your future and a great way of providing security for yourself. A solid savings strategy could help you: 

  • Save for fun trips;
  • Put down a deposit for a home one day; 
  • Be prepared for any emergency; 
  • Feel more confident and comfortable with your finances; 
  • Prepare for your retirement. 

If you think savings are that boring thing your parents tell you to have, we need to break the news to you: looking after your financial wellbeing could be fun and empowering! It doesn’t mean you have to miss out on anything either – at Tippla, we believe in the concept of finance without FOMO. 

In this lesson, you will learn:

  • How to set better financial goals; 
  • How to find out where your money is going; 
  • What strategies you could use to grow savings even if they are small; 
  • Where to get started. 

Goals digger, how to set saving goals and stick to them 

You may have a plan for your career goals and you probably know what you want from your personal life – but when was the last time you set down and thought about finances? Setting the right goals can be tricky when you don’t even know where to begin.

You could start with a few simple questions: 

  • Where do I see myself in 1, 5 and 10 years? 
  • What sort of life do I want to live by then?
  • How much money do I need to support this lifestyle?
  • Which assets are important to me? 
  • Am I saving for any big trips or purchases?

“What does my lifestyle have to do with finances?!” you may ask. Great question! Your lifestyle depends on your cash flow and, therefore, equally on your income and your access to finance. Most people who buy a house wouldn’t be able to pay it all at once. They take on a mortgage and then pay off their home while living in it. In fact, many big purchases don’t have to be paid straight up. There is often the option to make a purchase on finance and slowly pay off the full sum. However, your credit scores highly impact how easy you get approved for a loan and under which conditions. With a good credit score, credit providers will see you as a low-risk borrower and could offer you lower interest rates for loans, better credit cards and cash flow solutions when needed. 

Once you have the right strategies in place, your finances could flow much easier and you mostly won’t have to think about them anymore. 

Ideas for saving goals

If you really have no idea where to get started, here is some inspiration for saving goals: 

  • Saving for a mortgage deposit

When buying a home, you will often be required to put down about 20% of the full price as a deposit payment to start off with. Even if you are not sure if you actually want to invest in property, having a decent amount of money in your bank account could make your life much easier. 

  • Saving for a big trip

The best thing about memories is making them. Saving up for a dream trip could be an enriching and rewarding experience one day. 

  • Saving for your retirement

You can’t start thinking about your retirement early enough. While it may not be one of your main priorities right now, future you will thank you for your precaution. Even a small increase in your current super payments could make a big difference. 

  • Build an emergency fund 

Life doesn’t always go to plan and a big unexpected bill may come your way, you may want to quit your job or pay for a big move. No matter what life throws at you, with an emergency fund, have your own back! 

  • Buying a car

Cars are the second most expensive item most Australians will purchase in their life, often multiple times. With the right savings, you won’t have to compromise your safety while investing in mobility. 

  • Education

This is an investment in your future. Education doesn’t have to be finished when you graduate. Investing in your education could possibly enable you to earn more in the future and pay off long term. 

Setting your goals 

You settled on one or two goals to save for – what’s next? There are a few steps you could take in order to ensure that you will actually achieve them. 

  • Choose realistic goals. 

You should dream big! However, when it comes to goals, it is important to stay true to what’s achievable for you. Setting unrealistic goals could leave you feeling frustrated and unaccomplished. 

  • Specify your goals. 

You are more likely to achieve a goal when you make it specific. “I want to save a lot of money” probably won’t get you anywhere. Instead, go for the goal of saving sum x after every paycheck you receive. This gives you an actionable plan that you are more likely to stick to. 

  • Set a time frame. 

You are more likely to go for gold when your goals are set for a specific time frame. This could be anything from a few months to until retirement. By making your goals measurable, you have something to measure your own success against. 

Where does your money go?

Time to start saving. First of all, you want to know where your money goes. Often, it’s not our big-spending habits but small everyday decisions that end up costing you money. Small habit changes could easily free up some money to save. 

Track your spendings 

Observe and track your spending habits for a week. What are the small items that you spend a lot of money on? Are you spending a lot on eating out for lunch? Are you spending too much on turmeric lattes and snacks? We’re not saying that you need to stop treating yourself, do it consciously instead! A budget could help to make sure that your money goes to all the right places whilst allowing you to still splurge when you can. (You can find information on successful budgeting in Lesson 4: What the finance or in the Tippla Budgeting Spreadsheet.)  

  • Use an app or a spreadsheet to find out what you spend your money on. Some apps even directly connect to your bank account 
  • Check your banking statements to see where most of your money goes. If you pay cashless, this could be a good indication.  

Cut out unnecessary expenses

We all have them: this gym membership that you signed up for last NYE and then only went twice, a Netflix AND a Stan account, and two newspapers? Get rid of the ones that you are not using. Check all your subscriptions frequently, if it doesn’t spark joy, get rid of them. 

Apply the 30 days rule to big purchases 

We mostly waste money when we spend it on a whim. Whenever you are thinking about splurging on something big, you should take some time to think about it first. Do you really need it and is this actually the best you can get for the price? A good way to avoid spending money unnecessarily is to take 30 days (if it’s not an urgent purchase), do your research and think about it. If you still want it after 30 days, you’re good to go. 

Set up different savings accounts 

If you have more than one savings goal, it may make sense to set up different accounts for it. Each account could be dedicated to one specific goal and help you keep track of how you’re doing. 

To make it even easier, most modern banking apps allow you to automate your savings these days. You could dedicate a certain amount or percentage of your income to go to a nominated savings account and won’t even have to worry about it. 

Saving for success: Saving strategies 

When it comes to saving money, it’s best to have a proper plan you are following. Depending on your goal and what you want to achieve long term, there are many different saving options available to you. 

First of all, saving doesn’t necessarily mean that you have to cut down on things you really enjoy. Instead, we recommend you identify areas that you could easily change (and want to). You don’t have to put aside big money every month to grow your savings – consistency is key here! 

The 50:30:20 strategy 

If you don’t know where to get started, this one is an easy option for you. This method is a rough guideline on how much money should go where: 

50:20:30 budget, budgeting

Why is it smart?

Many bank accounts allow you to split your regular payments automatically into different spending and savings accounts. Once set up, you won’t have to do anything except keep an eye on your budget! 

Pay yourself first 

Earning money isn’t that much fun when you always have to think about bills first. Instead, you should pay yourself first! Transfer a set amount of your spendings account for things you enjoy like hobbies, going out etc. before you start paying your bills. (Of course, it’s important that you don’t overspend on your fun funds and don’t have anything left for your financial commitments. This is more a symbolic act of valuing your hard work!) 

Why is it smart?

When paying yourself first, you could feel more accomplished and satisfied. This is money you earned through hard work, you may as well have some fun with it! Saving doesn’t have to be all hard and serious. 

High-interest savings accounts 

Alternatively, there are multiple ways to grow your savings while the money is sitting in your account. One way is through a high-interest savings account. These accounts are getting rare these days, and the definition of “high” has definitely been reduced, but you may still be able to find one with better interest than your average savings account. 

Why is it smart?

Your savings could be sitting in your account anyway. They might as well help you earn some extra cash in the meantime. By choosing a savings account with a higher interest rate, you won’t have to do anything extra to grow your savings. Instead, you simply wait to see your returns. 

Micro-investing 

If you want to grow your spare cash, investing could be a great option. However, the sheer choice can be overwhelming for first-time investors. That’s why micro-investing is a good option. You don’t need big cash to start with. Instead, you could invest any small extra cash and watch it grow. 

The benefit is that it often comes with better interest than any savings accounts, however, you are also at risk of losing money short-term. It’s super easy, there are a few apps that you could use on the Australian market that could do all the work for you. 

Investments start from $50. You set up your account, choose a portfolio out of 7 different options and learn slowly how investing works. 

Spaceship lets you choose between two portfolios to invest in. You can either make one time investments or opt for an ongoing investment plan and completely forget about it. 

Raiz automatically invests your spare change. When making a payment, it rounds up and uses the extra cash to invest in a portfolio of your choice, no additional action required.

This app invests directly into the American stock market. 

Why is it smart?

You could use spare cash that you would have lying around otherwise anyway. It’s easy and convenient and could be a good starting point to get into investing in the future. However, investing always comes with a certain level of risk. Be careful not to overinvest! You should not drain your savings accounts or cut down in other areas. Rather use spare cash that you won’t miss IF you do lose it in the process. 

Tippla is a tool that helps Australians to access and understand their credit scores. We are not financial advisors. We work with a range of industry professionals and compliance check our content to ensure factual accuracy. We do not provide professional financial advice. Consider seeking independent legal, financial, taxation or other advice to check how the information in this lesson relates to your unique circumstances.

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