How to save $15,000 in one year

Pocketing extra cash doesn’t have to mean working more – or scrimping on your lifestyle. It’s all about making your money work harder, looking at where you’re probably just wasting money and embracing better deals.

Here are five ways to beef up your bank balance over the year ahead, with the potential to leave you $15,000 richer.

1. Review your home loan - Potential extra cash: $3,228

If you haven’t already done so, now is the time to put your home loan under the spotlight. Interest rates are at record lows, but the major banks have just hiked their 2-, 3- and 4-year fixed rates. It’s a sure sign the days of wafer thin home loan rates could be coming to an end. 

Each month sees around 20,000 Australians refinance their home loan, switching an average balance of $484,000. According to the Reserve Bank, the average rate on established loans is 3.1%. But the Canstar database shows refinancers can pick from a wide selection of loans with rates below 2%. 

Refinancing to one  of these super-cheap mortgages could cut the monthly repayments on a $484,000 loan by $269. That’s a total saving of $3,228 this year alone.  Yes, refinancing can come with costs including upfront loan fees. However, there’s a raft of lenders offering juicy cashback payments to refinancers – in some cases up to $3,000.  It’s a perk that can more than cover the cost.

2. Embrace unit pricing for a better deal on groceries - Potential extra cash: $1,600

Canstar’s latest Consumer Pulse report shows the cost of groceries is the number one financial pain point for Australians. And as consumer group Choice points out, it’s not just about navigating supermarket aisles.  The big brands are increasingly engaging in ‘shrinkflation’ – cutting pack sizes without lowering the price. 

That’s where unit pricing is so handy. It shows the cost of different items across equal measurements, like per 100 grams. This allows an apples for apples comparison to help you decide which product offers the best value. 

You’ll find the unit cost noted on the shelf-based price information. According to Choice, using unit pricing when supermarket shopping to maximise value, can cut your annual grocery bill by $1,600.

3. Have a clear out - Potential extra cash: $5,800

A Marie Kondo-style tidy up doesn’t just declutter your home. It can also see you pocket a decent chunk of cash. Gumtree’s 2020 Secondhand Economy report shows the average household could make $5,800 just by selling their unused and unwanted belongings – anything from clothing and appliances to furniture and books. 

4. Unleash your inner gourmet - Potential extra cash: $2,300

A survey by the Ruthven Institute estimates Australian households spend around $52,900 annually outsourcing various activities. The concept of ‘outsourcing’ used in the study is broad, and includes things like aged care and banking. However, the report did find that 8.8% of our total outsourcing spend goes towards meals through services like Uber Eats and Menulog. It’s a small proportion but the cost can add up to over $4,600 annually. 

Making home delivery a treat rather than a regular habit will fatten your bank account. Try halving your take-outs and home delivery orders, and rediscover the joys (and savings) of home cooking. It could see you save around $2,300 each year.

5.Make your money work harder - Potential extra cash: $2,170

The pandemic has seen Australians pour cash into savings accounts. Figures from banking watchdog APRA show Australian households now have more than $1.1 trillion sitting in bank deposits.

I’m all for having cash savings. But with interest rates at near-zero levels, it’s crazy to let massive chunks of cash wallow in a savings account. The scale of cash savings is mind-boggling. Let’s do the maths. There are 8.3 million households in Australia. Divide the nation’s total savings across those households, and it turns out the average balance per household is more than $135,000.

Time to put that money to work! Growth investments like shares and exchange traded funds (ETFs) have a track record for high long term returns. Yes, it means taking on more risk, and the returns are not guaranteed.  I can’t say what the sharemarket will dish up this year or the next. But over the last five years Aussie shares have recorded total returns – growth plus dividends, averaging 10.85% annually. 

On that basis, investing just $20,000 in shares and ETFs could see you earn a return of $2,170 over the next 12 months. Leave that money in a savings account, and you’ll be lucky to earn 1%, or about $200. Of course, if you have high interest debts or a mortgage it can pay to put your extra cash there. 

Try just a few of the steps I’ve mentioned, or have a go at them all, and you could have an extra $15,000 in twelve months. It’s not a bad way to set yourself up financially for the year ahead.