12 months ago, the Australian Federal Government announced a stimulus that allowed Australians to access money from their superannuation accounts early. The intention behind this measure was designed to support people who were adversely financially affected by the unfolding pandemic.
Recently, statistics relating to this measure were released and showed that over 2 million Australians had used this opportunity to access their super early. More interestingly than that though, was that 38% of those 2 million Australians had seen no drop in their income during the COVID-19 crisis. In fact, 21% actually saw an increase in their income of more than 10%. On average, Australians withdrew around $7,495 from their super accounts. The most concerning statistic in our view is that 64% of those 2 million Australians put that money towards discretionary spending – online gambling, clothes and shoes rated among the highest spends.
It is hard not to be horrified by this because choosing to take from your super is quite literally taking from your future. It begs the question, why did so many Australians choose to do this if they didn’t really need it? Is it because they had a financial need that couldn’t be identified through these statistics? Potentially. Is it because the allure of an extra $7,495 (or thereabouts) in their bank accounts is just too hard to resist? Perhaps it is that one could not visualise ever having access to this amount of money without taking from their super.
I am of the belief that anyone, no matter their income, has the ability to save $7,495 or any other savings goal they might have. Here are 5 things you can do to achieve it:
1. Create a money plan and really track your spending
We harp on about this one a lot but it’s because we’ve seen it work. If you are not tracking every dollar in and every dollar out, you likely have money slipping through the cracks. If you already have a Money Plan, add a row called ‘5 Steps to $7,495’ (or something a little catchier) and allocate your leftover cash there. If you don’t already have a Money Plan, make one! (You can access the worksheet here!)
Making a plan about where your income will go and what you intend to value will help you achieve this goal (or any financial goal you are setting out to achieve).
2. Reduce your expenses
Cut out the things you don’t need. Swap out a fancy restaurant date night for a fun time at sushi-train. Take your lunch to work instead of jumping on the Uber Eats run. In fact, delete your Uber Eats app altogether. Look at the money going out of your account and reduce, swap and pause anything you possibly can.
Then move what you would have spent straight to your ‘5 Steps to $7,495’ account.
3. Sell the things you don’t need or don’t use
Gumtree and Marie Kondo are your friends. Go through your home from top to bottom and find everything that does not ‘bring you joy’, give it a good scrub, and upload it to marketplace, gumtree, or eBay. I also like to ask myself the ‘24 month’ question. “Have I used, worn or even thought about this in the last 24 months?” No? I don’t need it and someone else might.
Remember to allocate any sale proceeds to your ‘5 Steps to $7,495’ account.
4. Look for the ‘extra’ cash
What extra cash? It’s out there. Lodge your tax return, use discount code sites, shop around for cheaper options, start a side hustle, take an extra shift, create an Airtasker account and sell your skills. If you want it, you’ll find it.
Allocate any additional income to your ‘5 Steps to $7,495’ account.
5. Wage a war on debt
Cut up your credit card or remove it from being your ‘preferred payment method’ on any online accounts. Make it harder to use so that you really have to get off the lounge and remember where your wallet is every time you scroll past that “something new” you never knew you needed. Cancel your AfterPay, ZipPay or whatever pay later scheme is popular right now. Boycott it all!
If you really set yourself up and follow through, reaching $7,495 and far beyond is easy. Keep saving this way and there will never be a need to borrow from your future again.