How to save money without giving up your daily coffee

7 tips guaranteed to put more money in your pocket

We’ve all read the budgeting advice that tells us the only way to save money is to trim all the fat from our spending. The key to wealth, we’re told, is to give up our morning coffee and our magazine subscriptions and to start taking our lunch to work in a brown paper bag.

But surely the point of saving is to let us live the lives we want, not to sap our lives of everything we enjoy. That’s why we’ve developed these tips for saving money without sacrificing your lifestyle.

1. Think big

Why focus only on cutting the small things when there’s room for bigger savings by reducing our big expenses. And, for most of us, there’s no bigger expense than the home loan. In fact, the average Australian now dedicates a third of their gross salary just to meeting mortgage payments. By switching to a bank with a better deal – or negotiating a lower rate with your existing bank – you can make a real difference to the amount you have to outlay each month.

To make the most of your offset account you can use it in combination with a credit card for your day-to-day purchases. When you leave money in your offset account and pay the card off in full right before the due date, you’ll minimise your interest repayments, pay off your home loan sooner and save more.

2. Think small

While you’re negotiating down your biggest expense, why not complement it by saving your spare change? Savings app Digit checks your spending habits and takes a few dollars to save if it’s available. While the Raiz app rounds up every purchase you make and invests the difference in a diversified portfolio. Over time, you should notice a nice nest egg starting to grow without feeling any pain at all.

But don’t just tackle the savings end of the equation. You also need to make sure your spending and saving philosophies align.

The 50/30/20 rule says that, ideally, 50% of your money should go on essentials like housing and electricity and 30% should go towards lifestyle, like gym memberships and food (yes, it’s lifestyle too). The remaining 20% should go towards savings or paying off any debt you might have.

These ratios are just suggestions as everyone has different values, but once you calculate an equation that works for you, it’s easier to see where to trim the fat.

For instance, if you find that 40% of your pay cheque is going towards takeaway food, you need to get organised with your groceries.

3. Make your work, work for you

One of the easiest ways to put more money in your pocket is to make sure more money comes in. And, for most people the obvious way to do that is through a pay rise.

But asking for a pay rise isn’t easy. You’ll have to make your case by looking at other comparable salaries and justify your worth as an employee. But, even if that still leads to a ‘no’ you’ll at least have a better idea of what needs to be done to secure a raise in the future.

There are other ways your company can help you without upping your pay. They may be open to paying for the training courses that will get you that raise next time. Alternatively, your boss may be willing to put you in a better financial situation with limited impact on their bottom line, by letting you salary sacrifice a car or your super.

4. Compare, contrast and negotiate

There are comparison sites for virtually everything now, from health insurance to energy bills. So it’s no longer hard to tell whether you’re getting the best possible package from your provider.

If you’re comparing, make sure you use an authoritative comparison site such as Choice. Some sites won’t compare all providers or are even owned by the same company as the brands they’re comparing. Make sure you’re comparing like for like too: you don’t want to get a cheaper mobile plan if you are sacrificing data, or a health cover which doesn’t include obstetrics if you plan on expanding your family.

If you’re happy with your provider you can always try to negotiate a better rate. Many businesses will offer discounts to loyal customers who state their intention to leave. So let them know what another provider is offering and see where they steer the conversation. You have nothing to lose and only money to gain.

5. Work with your tax agent

You may be entitled to claim a tax deduction for certain expenses if they directly relate to income you earn. For instance, if you work as a professional you may be able to claim relevant magazine subscriptions, work-related mobile phone calls and even your laptop.

If you run a home office, part of the interest you pay on your mortgage may be deductible. You may also be able to claim a deduction for the cost of lighting, heating and cleaning your workspace.

Have a look at the ATO website for more information on work-related deductions. You should also speak with your tax agent to determine what expenses you may be eligible to claim.

6. Slow down your spending

If you find spending is a problem for you then you may need to alter the way you think about money. One thing you could do to really reinforce the value of every dollar is to divide your salary by your office hours so that you understand exactly how much an hour of your labour is worth. Once you make that calculation, you’ll get a better sense of whether paying for a $50 taxi ride is worth it after all.

If you struggle with impulse purchases like designer shoes, wait a day or two, and then see if you still want them as much. If credit cards are a problem try giving them up altogether, at least for a while. That way you’ll only spend what you have. And if your mood influences your spending patterns, only shop when you’re in the right frame of mind.

7. Make more cash

A recent Galaxy Research survey found that 90% of Australians have unwanted items in their house, so why not sell them? Use eBay, Gumtree and even Facebook groups to declutter your house and turn what you no longer need into cash.

The sharing economy doesn’t end there. You could also look at leasing unused space or items. Rent out storage space through Spacer, put your home on Airbnb when you’re next on holidays or rent your car out through Car Next Door. Each of these give you the opportunity to earn money by doing very little.