Life doesn’t always go to plan, you can budget for what you know is coming up but sometimes things happen unexpectedly (like a parking fine or even a redundancy) which throws a spanner in your finances. When you have a growing family, those surprise expenses tend to pop up a little more often. The best way to combat those pesky expenses you didn’t see coming is to give yourself a savings buffer.
So, what’s a savings buffer you ask? It’s money you’ve put aside to pay for things that pop up you haven’t planned for. It usually covers small expenses that could cost you anywhere between $50 to $1,000, such as replacing the windscreen wipers on your car or a vet bill.
Having a savings buffer means you can keep your finances on track during tough times. Here are some ways you can give yourself a financial buffer and stay ahead of the game.
Start a coin jar for spare change
It’s not unusual to find spare change lying around the house or for it to fall from pockets when you’re doing the laundry. A coin jar is a great way to save without it impacting your budget too much. It’s also something the whole family can get involved in.
When the jar fills up, you can take it to the bank and deposit the cash into your savings account. Doing that a couple of times a year can give you a nice little buffer.
Pay a little extra on your home loan
When you can, pay a little extra on your variable rate home loan. Something as small as $50-$100 a month could put you ahead on your home loan enough to cover a repayment or two (depending on your repayment amount) if something unexpected was to happen. It also puts you in a better financial position if interest rates were to increase.
Build a savings habit
Creating a new habit isn’t always easy, like going from a late riser to an early morning person once baby comes along. But like many things, the more you do it, the easier it gets.
There are a few things you can do to create a savings habit:
Set a savings goal
Open a separate savings account for your buffer
Automate your savings every week, fortnight or month
Ask your partner or a friend you keep your accountable
Maximise your offset account
If you have a home loan with an offset account, use it for your savings. Some lenders even let you have multiple accounts so you can have one specifically for your savings buffer. This means you’re lowering your monthly interest repayments, giving you access to a little more money which you can save or put towards your home loan.
Create fun family savings rules
Sticking to a budget isn’t always easy but it truly does help if you’re trying to save a little extra every month. A good way to spend less on things like eating out or take-away is to create a family rule where you choose a day once every week or month that becomes extra special and gives the family something to look forward to.
For example, Friday night could be take-out and movie night with your children. Plan for it together, make a big fuss about it and most importantly, don’t forget the popcorn!
Check your home loan every year
Do you regularly check your home loan to make sure you’re always on the best deal? If you haven’t reviewed it in more than two years then you might be paying more than you need to. By regularly looking for better deals (when the benefits outweigh the costs) or negotiating a lower interest rate with your lender, you’ll always be on the best rate for your needs. That means you’ll also have a little extra every year for your savings buffer.
We all need a little help when life gets tricky, being prepared means you’ll avoid the stress that comes with unexpected expenses.
Article supplied by True Savings.