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Shhhhh: the secret to saving money is...

By Allison Tait, MSN NZ Money writer
Thursday, April 26, 2012
What is the secret to saving money?
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All the financial advice in the world won't help you if you can't find it when you need it. Which is why the secret to saving money is at your fingertips.

Where do you keep your financial information? In a pile in a corner of the kitchen? Stacked up under your desk? Shoved in a drawer in your bedroom? At a time when chaos reigns on the world financial scene, it's time to take back the reins on a small scale. Being disorganised is not only interfering with your feng shui, it's costing you money.

"There is a lot of valuable time and emotional energy wasted worrying when you know you're disorganised," says Peter Thornhill, principal of Motivated Money. "You think of the same thing over and over and never get to where you want to go."

You know you've done it — "Must pay that credit card bill, must pay that credit card bill …where is that credit card bill?" — and it affects everything from the monthly bills to deciding what you're doing with your superannuation.

"A lot comes down to personality," says Thornhill. "If you make no decision, you've made no mistake. It's easier to do nothing than to make a decision and then potentially regret what you've done."

So you pick up your statements or that letter from your bank, look at it — and then put it down somewhere else. It's also easier to make a decision when you have all the information you need to hand.

Faced with a paper blizzard, however, most of us choose to put our heads down and decide we'll think about it "tomorrow".

Tomorrow is today

Unless you're Lissanne Oliver, director of Sorted! Organising & Decluttering, who endorses the idea of starting today. "Being organised saves you money," she says. "Take the time, pay attention and you'll not only meet any deadlines for payments but you won't miss any opportunities."

So where do you start? By keeping your paperwork in one place. "It can be a shoebox," says Oliver. "You don't need a filing cabinet, an expanding file, or colour-coded manila envelopes — just get it all in one place."

Her tip is to worry less about the way it's stored, and more about the categories in which you store it. "The categories you choose depend on what you need to keep," she says. "Keep your banking details together, utilities together, telcos together. Don't make so many categories that you can't be bothered doing the filing."

Which brings us to the next point: do the filing as you go. "Open your mail and read it then and there," says Oliver. "So much of our mail is finance-related and you need to be across the information. Don't think you'll do it later."

If you do it on a regular basis, it's less unpleasant. Think cleaning the bathroom or weeding the garden — do it once a week and it's manageable. Leave it any longer and the situation gets messy.

Oliver also recommends being ruthless about what you keep. "People are afraid to throw finance stuff out, even if they'll never need it again," she says. "You only need to keep your tax documentation for five years from the time it's filed — if you've got stuff dating back to 1999, dump it."

Unless you're keeping utilities accounts for tax purposes, Oliver suggests keeping them for 12 months maximum. Credit card statements have fulfilled their purpose once you've checked the transactions and paid the bill. Although Thornhill suggests statements can be useful as proof of purchase down the track, while Oliver only keeps hers long-term if she's travelled and wants to remember the name of a shop.

Simple investment

Oliver sees the time spent sorting your financial paperwork as an investment. "There's a link between a lack of organisation and lack of time-management," she says. "Make the time to keep an eye on your money — it won't just happen."

Make use of the systems in place to help you. Set up online payments and direct debits and keep a list in your diary of what's due to be paid when. "Use your diary to keep track of when bills are due so you won't miss a payment," says Oliver.

Her final tip for financial clarity: "Don't hang on to every receipt! You don't need the receipt for two apples at the fruit shop — don't even take it."

She recommends cleaning out your wallet every two days — once a week at the very least — and filing the receipts you do need.

If nothing else, you'll at least then be able to find the cash you do have!

User comments
The another best way of saving money can be opting for a life insurance policy.
I enjoyed reading this article and believe that filing has a great deal to do with an individual's potential to saving. For those that disagreed with it, step outside the square and thinking logically, the essence of saving is all about being organised. hence the ongoing positive personality. I bet those that have good savings wouldn't be messy and disorganised in their filing of their accounts and correspondence.
For those of you saying "saving matters, not filing" then I say your mistakes will be repeated and you may save $1 a day, but you could have saved significantly more if you actually looked at the information in front of you. Filing your papers after the bill has been paid means you can assess your spending and identify weaknesses. If I hadn't known that I spend $300 a fortnight on groceries, I would also have failed to learn that others comfortably spend half that - so what am I buying thats doubling my costs? And Voila, I have just saved $150 a fortnight.
You have to have a good idea of what your expenses are. I found by adding up all of my utilities, i.e. power, phone, rent, sky etc and food and petrol over a three monthly period then dividing that by 12 it gave me a good indication of what my weekly expenses came to. This assisted me in terms of living within my means. I was then able to cross reference that to my income earned in a week, I realised I had more money left then I thought and started to save at least half of the left over income every week. Another great tip is set up automatics payments on internet banking for your savings and bills on a weekly basis. Therefore when the power comes in at the end of the month you've already paid it......Hope this helps....!!
Be sensible in your approach to shopping if you want to save money. If you see something on special that you use a lot of then buy plenty of it so when you run out you don't have to buy it at a higher price. Pay your credit card off every month and also make automatic payments into kiwi saver if you are not already in it. Don't waste left overs, put them in the freezer for another meal. Cook up all your vege peelings and off cuts of meat which will give you great stock for cheap and wholesome soups. Saving money is easy, you just have to be committed to it and have some backbone.
I absolutely agree with U ONLY. The secret to savings is only helping people with being organised and managing bank statements etc, yet it doesnt tackle the ways of how to save... I save money online banking (options of visibly seeing your savings account and amount OR simply remove it and money still go into account). The other way I save is putting $10 or $12 per week( $1 a day) in a piggy, without even thinking about it, totalled to $624 a year. I had to change my personality(being positive) about savings, therefore, when money goes into account, it wouldnt tempt me to withdraw it again.. POSITIVE ATTITUDE will succeed in anything.
I fully agree with U Only from Wellington. One could have as many filing cabinets as they wanted with everything in perfect order and filed meticulously. All a waste of time and to no avail if there is no actual money going into the bank account! Fling isn't the secret to savings. Saving is the secret to savings. Every dollar adds up, so even if you can only afford $5 a week, that's still $260.00 after a year. Not much to some, but the difference between Christmas or no Christmas for the kids for others. Also a habit easier said than done as I know firsthand. Mind over matter....do we really want takeaways tonight? Or can we skip fish'n'chips, cook some mince up into something yummy and put that money we were going to use, into our bank account? They say practise makes perfect....
Being able to be organised in filing ones financial papers is not the secret to saving. The secret is to be able to cultivate the habit of saving money. Every drop counts - so you will have to squeeze hard for every cent to save. The art of saving is difficult to achieve. Will be nice to have bits and pieces of savings stashed everywhere and not filed away proper. Being not organised in the paperwork does not matter. The important issue is you able to save.