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A dollar saved is worth much more than a dollar earned. (Source: Getty\/Supplied) <\/p>\n A dollar saved is worth much more than a dollar earned. (Source: Getty\/Supplied) <\/p>\n
Saving money isn\u2019t easy, and the standard approach is to just ‘try harder’ \u2013 but there\u2019s a smarter way<\/a>.<\/p>\n Saving more isn\u2019t about willpower, it\u2019s about making saving your default result<\/a>. Recent data showed our savings rate in Australia was on the decline in recent years hitting a low of 2.5 per cent, but has now snapped back to a more healthy 6.4 per cent of income, according to the ABS.<\/p>\n But I can say from experience that saving at below that level will make it hard to create any real level of financial security into the future.<\/p>\n RELATED<\/p>\n If your strategy is relying on saving ‘whatever\u2019s left’, you probably already know how that story ends. Below I\u2019ve covered my top five hacks you can use to save an extra $19,350 this year.<\/p>\n The examples are based on ABS data that shows the average income for a middle income household in Australia is $117,495. If your household income is higher or lower, you can scale the numbers.<\/p>\n RBA data shows a big gap in savings behaviour across Australia. The highest income households save around 12 per cent of disposable income, while the middle 20 per cent saved only around 3 per cent of their income.<\/p>\n Based on the average household income, that 9 per cent gap equates to a difference of $10,575 each year.<\/p>\n One of the most powerful ways to move yourself from being an average saver to an elite saver is a simple one, to pay yourself first. Instead of getting paid, sorting your bills, and working your way through your paycycle in the hope there will be some money leftover to save, you flip the script.<\/p>\n Instead, when you get paid, the first transfer you make is to your savings account – then the money that\u2019s leftover can get split between bills and general spending. This moves saving money from a decision to a \u2018setting\u2019.<\/p>\n A budget on a piece of paper or spreadsheet doesn\u2019t translate to savings success. But a budget that\u2019s backed up by a bank account system is much harder to sabotage.<\/p>\n There are many different ways you can do this, but over the last 15 years helping people with their savings I\u2019ve found the most effective bank account budgeting system<\/a> is a simple one. You have one account for your bills and debts so they\u2019re paid without you having to think (or stress about them). A second account for your everyday spending, food, entertainment, and discretionary spending. Then a third account for less frequent spending like travel, gifts, and things for the house. And the final account for your savings, so this builds up separately to your other money.<\/p>\n Story Continues <\/p>\n If this set up prevents just $100 a week of unplanned spending or leakage, that\u2019s another $5,200 each year straight to your savings bottom line.<\/p>\n Saving more isn\u2019t only about spending less – it\u2019s also about (legally) paying less tax. And every dollar of tax saved is an extra dollar that can go straight to your savings bottom line.<\/p>\n There are a range of different tax saving strategies<\/a> you can use to cut your tax bill and keep more of your income, from negative gearing<\/a>, debt recycling<\/a>, franking credit investing<\/a>, and the list goes on. But one of the simplest tax saving strategies<\/a> available to Aussies is tax deductible super contributions<\/a>.<\/p>\n Under the current rules, every working Australian is eligible to contribute up to $30,000 to their super fund each year and claim a tax deduction. That $30,000 includes any compulsory contributions to your super from your employer, but for most people this leaves room for some significant tax deductions.<\/p>\n Redirecting $5,000 of your income to your super fund by salary sacrifice will save you $1,200 in tax each year, based on a marginal tax rate of 39 per cent. That\u2019s money straight into your long term savings kitty.<\/p>\n An offset account directly reduces the interest costs on your mortgage<\/a>, and gives you a saving equivalent to your mortgage interest rate plus a tax savings benefit.<\/p>\n For example, if your mortgage interest rate is 6 per cent, parking $20,000 in your offset account for the next 12 months will deliver you $1,200 in interest savings. These savings can be used to reduce your mortgage balance, saving you even more interest costs in the years ahead.<\/p>\n Cutting spending to increase savings is always difficult, which is why one of the most effective ways to save more is to increase your savings rate as your income increases over time. It\u2019s natural that as your income increases, you want to enjoy the extra money coming in – but when you carve out some of this increase for savings it accelerates your progress, slowly at first but this compounds over time.<\/p>\n Next time you get a pay bump, promotion, or have your annual pay review, direct part of the money to savings. Even a tiny 1 per cent increase is meaningful, based on our ABS average household income outlined above, this will deliver an extra $1,175 each year to your savings bottom line.<\/p>\n Add these five moves together and you\u2019ll boost your savings by an extra $19,350 over the next 12 months. This isn\u2019t magic, it\u2019s just setting your money up so that savings is your default outcome, not the things you try to do at the end of a long month.<\/p>\n None of these saving hacks are earth shattering on their own – the power is stacking them, then automating things in a way they can happen without your willpower needing to flex daily.<\/p>\n Ben Nash is a finance expert commentator, podcaster, financial adviser and founder of Pivot Wealth<\/a>. You can learn more about how to be smart with your money through Ben\u2019s book Replace your Salary by investing<\/a>.<\/p>\n If you want some help with your money and investing, Ben has created a free seven-day challenge<\/a> you can use to get more out of your money you can join here<\/a>.<\/p>\n Disclaimer: The information contained in this article is general in nature and does not take into account your personal objectives, financial situation or needs. Therefore, you should consider whether the information is appropriate to your circumstances before acting on it, and where appropriate, seek professional advice from a finance professional.<\/p>\n Get the latest Yahoo Finance news – follow us on Facebook<\/a>, LinkedIn<\/a> and Instagram<\/a>.<\/p>\n From little things, big things grow. (Source: Getty) \u00b7 Getty Images <\/p>\n