Are you spending smarter? How saving can affect your budget

The NAB Consumer Sentiment Survey for Q1 2024 found that while the cost of living is still a significant concern, many Australians have made some changes to manage their personal finances.

Some of the 2000 surveyed Australians were found to be making cutbacks on: 

• eating out at restaurants (57%)
• treats like coffees and snacks (52%)
• entertainment (49%)
• car journeys to save on petrol (46%)
• holidays (45%)
• food delivery services (43%)

Thanks to these cutbacks, Australians are reportedly saving around $320 per month, or more than $3800 per year. Surveyed Gen Z participants were found to be saving even more, putting away around $370 per month.

The survey also found that around 4 in 10 Australians were putting extra money into savings and offset accounts, while 1 in 5 were paying down debt.

NAB personal banking group executive, Rachel Slade, said Australians were becoming more sophisticated as they fine-tuned their spending and saving behaviours and used budgeting tools on offer from their bank.

“Australians are embracing ‘smarter spending’ to help them manage the cost of living and keep their budgets under control. Carefully cutting back might mean a small tweak to spending on coffees and food delivery or making holiday plans that are more budget conscious to prioritise things for themselves, their kids or their family.”

Once you’re saving some money, how can you make sure these savings make a difference to your personal finances? Let’s make a few calculations.

Using the average savings provided by the NAB survey and the RateCity savings calculator, imagine you were saving $320 per month, and depositing these savings into a savings account with an interest rate of 5%. Given monthly deposits of the same amount, after a year you would have saved a total of $4266, including $106 of interest. Using the Gen Z average of $370 per month, you could finish with a total of $4932, including $122 of interest.

Saving like this could be a handy way to reach your financial goals. But depending on your household ‘s financial situation, you may find that other options may better suit your needs.

For example, mortgage holders could put the extra savings into their offset account to help reduce the interest they are charged. Over time, this could help to pay off the loan faster and save more interest in total, while still maintaining easy access to your money if you really need it.

Paying off debts such as credit cards can also prove valuable under the right circumstances, as the faster you can clear a debt, the less interest and fees you may be charged in total.

You could also consider investing your extra savings in assets of your choice, though it’s important to be aware of the potential risks and rewards involved before making any commitments. Consider contacting a financial adviser for independent advice before making any significant changes to your personal finances.