Money is one of the most important and essential components of our lives. Learning how to make more money, and save more money, in your life will provide immense improvements to your quality of life - you just need to know where to start.
If you’re ready to start earning more money, saving more money, and living a better life, then read on to begin your journey with Money.
Start making more money
Step 1: Learn to budget and get out of debt
Creating a basic budget will be your first step to making - and saving - more money in your life. Once you’ve performed a financial audit of your life and feel in control of your finances, you’ll be ready for an advanced budget planner with greater depth.
For now, we’ll use a beginner’s budget strategy: The 50-30-20 budget.
The 50-30-20 budget is a simple, easy-to-understand budgeting technique anyone can use, and involves four steps:
- Assess your net income (i.e. after-tax salary/take-home pay)
- Assign 50 per cent to essentials
- Assign 30 per cent to non-essentials
- Assign 20 per cent to savings and debt
Beginner Budget Example (50-30-20 Budget)
|Essentials (50%)||Non-essentials (30%)||Savings and debt (20%)|
An extra coffee each morning
|Credit card debt
Growing an emergency fund
Beginner’s budget tips
- Problem: Keeping your list of essentials to 50% of your income can be difficult - it’s a clear view of where you have been overspending and making changes can feel restricting.
- Solution: Your budget is a foundation to start making and saving money. You can only make realistic goals if you are realistic about your current situation.
- Problem: Some expenses are both essential and non-essential - e.g. a phone plan for work
- Solution: Look for all ways to reduce these mixed expenses. Speak to your employer about subsidising your phone plan, or look for a better option.
- Problem: Even with 20% put toward repaying debts, it feels impossible to manage, and I’ll never save money.
- Solution: Small things lead to great results, and the sooner you begin, the better.
Sooner is always better - this is true for both saving and repaying debt:
- The sooner you repay your debts, the less you’ll pay over time.
- The sooner you start saving, the more you’ll save over time.
The most important thing in saving - like maintaining a healthy diet or going to the gym - is being able to maintain a consistent mindset that will allow you to track progress over time.
Remember: everything we do at this stage is to make money for one of two reasons:
- To reduce current debts
- To start a savings account
Now we have a basic overview of our income and expenses, it’s time to look at some financial spring-cleaning.
Step 2: Sell items for money
This next step is to look at clearing out your home of unused objects. There are many benefits to committing to this as the second step of your journey:
- It forces you to examine what you actually need and use in your life
- You see the immediate (monetary) value in removing these
- It develops a mindset of finding value in your purchases - both for quality and necessity
- It is a physical activity which mimics the mental activity of creating a budget
Below is our ultimate list of household items to sell for money - if you’ve got any others, let us know!
Ultimate list of household items to sell online for money
Games, puzzles and board games
Spare vacuum cleaner
|Kitchen and whiteware||The spare freezer
Unused kitchen appliances
|Large furniture||Old beds
Dining tables and chairs
Perfume and aftershave
|Electronics and devices||DSLR cameras
Old mobile phones
Computer accessories and cables
Plates and saucers
Rarely worn designer clothes
|Garage and shed||Tools
Camping equipment and chairs
Old lawn mowers
Old printers and electronics
Maximise the money you make through selling items by charging delivery in local areas, or using social media to avoid listing and success fees.
Step 3: Find other ways to make money
Secondary and passive income
Once you’ve cleared out your home and sold any unused items and furniture, it’s time to look at ways to maximise your earning potential. Outside of your primary career, look at ways to supplement your income through a side-business or passive-income opportunities:
- Putting flat pack furniture together
- Writing services
- Design services
- Dog walking
- Music lessons
Negotiate better deals
Look at the consistencies in your spending, and where you may be able to negotiate a better deal:
- Cancel subscription services you don’t use
- Find a cheaper mobile plan or switch providers
- Switch to a credit card with low or no fees
- Switch to a bank account with low fees
- Consolidate your debts
- Consider refinancing your existing mortgage
- Search for online coupons and delivery codes when buying online
- Negotiate a pay rise
Earn more money
A pay rise is the fastest way to earn more money, whether you’re starting a job or negotiating your salary with an existing employer. Assessing your salary and value as an employee are two crucial steps in this process - you can learn more in our guide on negotiating your salary and how to get a pay rise.
How to build wealth
Now that you’ve maximised the amount of money you can earn, and the amount of money you can save through your beginner budget, your next steps will be to build wealth into the future:
- Create a full and complete budget plan
- Open a high-interest savings account
- Learn how to grow your wealth through term deposits
- Learn how compound interest works
- Maximise your tax refund and make additional contributions to your superannuation
A budget plan is an accounting tool which lets you easily track your income and expenditure. A budget plan is a crucial part of an effective financial plan, and can be created to track short, medium, or long-term financial goals. You can use a budget plan to save money, pay off debt, or assess long-term goals such as purchasing a home.
An honest budget plan will be the best way to see how much money you have coming in and going out each week, fortnight, month or year - and help you take complete control of your finances.
Learn more about using a budget planner spreadsheet.
A high-interest savings account (HISA) is a type of savings account offered by banks, which is similar to a standard bank account, but is designed for saving instead of spending - these savings accounts will often also have bonus interest applied when certain savings conditions are met, and use compound interest calculated daily and paid monthly.
Learn more about high-interest savings accounts.
A term deposit is a low-risk investment strategy offered by major financial institutions - such as banks - which allow you to invest your money at a fixed interest rate for a predetermined period of time. As you are unable to access your funds without incurring harsh penalties, banks offer higher interest rates for term deposits than standard savings accounts.
Learn more about how to get a term deposit.
Compound interest is the process of increasing an amount of money at set periods by applying interest to a new, calculated amount each time.
The easiest way to understand how compound interest works is to look at it as an amount of money plus interest that is calculated on a previous amount of money plus interest. It is a cycle of financial growth where increasing amounts with the same interest rate applied will still continue to yield greater additional earnings each time.
Learn more about compound interest.
Your tax return is a constant in your working life, and learning how to maximise your tax refund early on in your working life will be a great advantage toward long-term savings goals.
Tax deductions are used to reduce the amount of tax you need to pay to the ATO each year, and can help maximise your tax refund amount. When completing your tax return, you can claim deductions for certain expenses related to your income. You can engage a registered tax agent to identify all deductions you may be eligible for.
Learn more about how to maximise your tax refund.
Budgeting and personal finance are complex aspects of our lives which, when mastered, can provide incredible, lifelong benefits. Learning how to make money and save money are the two most basic foundations for financial freedom, and will teach you to find value for money without having to pinch pennies in your spending.
Once you’ve learned how to maximise the amount of money you earn, you can begin looking at how to save money and truly get the most from your wealth.