With recently released figures from the Federal Reserve Bank showing a marked increase in credit card use for the month of September, even though the global financial crisis was in full tilt, indicates that the majority of Australians have continued to use their cards regardless of fees and charges. This increase in spend has also resulted in an increase in payments on fees and charges.

With future rates rises more likely than not, we here at Debt Negotiators have formulated an 8 tip guide to saving. These tips may seem simple but it would surprise you how few Australians actually have a savings plan and thus are using credit cards for not only major purchases but also to pay day to day bills.

Even if you don’t believe you need help with saving, these tips may be more useful than you think.

1. Target savings. Before considering structuring a savings plan it is important that you have an end goal, as this will make you put more effort into your savings. It may be something extremely simple such as having a nice dinner but if you have this goal you will have not only the amount you set out to achieve but also a little extra. If you have previously struggled saving for something major start small and work your way up. There is no point planning to save for a holiday if you have never attempted to save before.

2. Time period. Once you have your goal in place you need to begin the process that will allow you to reach that goal. The first thing you must do is calculate how you want to do your budget. Whether it be weekly, fortnightly or monthly, you may not necessarily want to base this decision purely on when you receive an income. Use all factors in your life to determine the best structure for you, please remember this is your plan, do not allow yourself to be influenced by other people.

3. Total income. It may seem obvious but you do need to calculate all income you are going to receive over the selected period. If the budget is singular and you have a rental property you must calculate your rental income. If it is to be a family budget take into account all income from all parties. If this is to be your first budget with your partner you must be completely honest with all income. Remember honesty will allow you to work together.

4. Compulsory expenses: Compulsory expenses are expenses that you don’t have a choice in paying; these may be rental payments due, mortgage payments, car payments, credit card payments, loan payments, utility bills, car, home or life insurance, and children school fees. If any of these expenses are outside of the time period you choose ie- monthly car payments weekly budget. You will need to calculate how much your payments would be on a weekly basis. It is best when calculating the compulsory expenses to add a couple of dollars to the correct amount, as if you use this budget for a long period of time any of these compulsory expenses are likely to increase. Once you have worked out what payments out of compulsory you need to make write the amount down alongside.

5. miscellaneous expenses: these expenses are the ones that are required each time you receive an income however they are not actually due on a particular day ie petrol, groceries, clothes, school expenses, cigarettes, going out. These are the expenses that you have the most control over but be aware that you are best to add an extra couple of dollars to the amount you think as you did with compulsory expenses. You never know when you might have to spend that extra bit on groceries. Once you know what you will be spending money on write this all down.

6. Calculate total expenses: You have now written all of your expenses on a weekly, fortnightly or monthly basis, the next step is to add all of your expenses together to give you a total. This will be your total expenses for as long as you use this budget.

7. Calculate funds available. You now know how much you will be spending on all expenses over a set period of time; you also know how much income you will receive. What you now need to do is calculate how much money you have left after taking into account your expenses. To do this subtract total expenses from total household income i.e. income-800 expenses-750 available funds=50. The amount available will be your money for whatever you like.

8. Finalise your budget: Remember this is your budget and you need to be comfortable and confident with the amount you are either spending or saving. What you now need to do is the final step on your way to reaching your goal. You now need to calculate how long your savings goal should take you with your available funds i.e. holiday needs – 1000 excess funds 50 per week, length of time to reach goal 20 weeks. Doing this will allow you to be excited putting the money away the first couple of weeks , you will then be used to it and by the time the 20 weeks are up you will have the money saved to go on holiday.

We here at Debt Negotiators have helped a number of clients formulate a plan for saving for a holiday, once they have taken the holiday they have told us it was the best holiday they have been on. That’s because they paid for it themselves instead of using a credit card or loan.