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The best ways to cut your expenses and increase your savings for home deposit

Is the key to saving a home deposit as simple as giving up smashed avocado toast for breakfast? Well not quite, but spending less does make a difference.

On top of a budget, a savings plan and strategies such as a high-interest savings account, the most effective way to save is to reduce or eliminate expenses.

Start by understanding how you spend your money It can be easy to lose track of how you’re spending money, especially due to cashless payments and credit cards.

Most online banking systems have included tools in their online system to categorize debits and make a budget. Or there is an APP from ASIC called ASIC’s TrackMySPEND, it allows you to track your personal expenses.

Find savings in the essentials Some costs can’t be avoided – but many everyday expenses can be reduced. For example, you could:

• Move in with your parents/relatives, or move into a cheaper rental or share house (short-term discomfort can pay off in the long term).

• Implement tactics like meal planning, making grocery lists and buying in bulk to save money on food. Set aside a budget for eating out/takeaway and stick to it.

• Shop around to reduce your regular bills – you may get better value if you switch, or tell current providers you intend to switch. Seek discounts for taking out multiple policies with one insurer.

• Use the car less: take public transport; carpool with colleagues; or try walking or riding. You’ll be amazed at how quickly it all adds up to savings.

Most of the credit card providers charge 18%-20% p.a if you didn’t clear the balance each month. So, please make sure you are paying off the credit cards balance each month to avoid the added expenses of high interest.

Reduce common overspending If you always overspent on things like buying clothes, dining out, games and high-end technology, it will be impossible to cut the expense entirely, but you can set a weekly or monthly limit in those items.

A survey of more than 1000 Australians showed that 73 percent having a problem with overspending, especially when they tend to go overboard Christmas rolls around. To reduce gift expenses, be like Santa: make a list and buy only planned items within your allocated budget.

Another most common way for Aussie overspend is on holidays trip. Commonwealth Bank research has shown that a third of people spent more than their planned trip. The best way to save during the holiday trip is to do your research and set a daily budget.

Costs that could be eliminated Look for any unused services. Either reduce or cancel the services. Such as you joint the gym membership but you seldom go to the gym or you have pay for 30GB of mobile data plan but you only use 5GB per month. Every single dollar you save you could put toward into your home deposit.

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