Save Money Using the 1 Cent Challenge

The 1 Cent Savings ChallengeThe 1 Cent Challenge is a really easy way to save money, especially if you’ve struggled saving money in the past.  If you’re looking to save for a holiday, to buy shares or just to put some money aside in an emergency fund, you should try this challenge.

How the 1 Cent Challenge Works

You start on day one by saving just 1 cent.  On day two, you save 2 cents, on day three you save 3 cents.  Got the idea?  Basically you just increase by 1 cent each day.

While it doesn’t sound like a lot to begin with, over the course of a year it will start to add up.    In fact by the end of the year, you will have saved over $670!

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How to save your first $100k

Guru investor Charlie Munger once said “The first $100,000 is a bitch”.  It sure is.  When you start out investing and saving, your money will gain very little from compounding.  Most of your growth will come from putting aside money from your salary and other side income.

Once you hit $100k though, things will start to become a little easier.  For many people $100k seems completely unreachable.  But there are countless stories of people who have been dilligent with their finances and managed to overcome that barrier.  Here are some tips you can use on your journey to ammassing your first $100k.

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18 Ways to live a more frugal lifestyle and have more money

Living a frugal lifestyle is not something that just happens overnight.  But over time you can make lots of little changes that will all add up to more money in your bank account.  Here are some my top tips for living a frugal life, let me know your tips in the comments.

Get your finances in order

  1. Start Investing and not just Saving – Using a “savings” account to save money over the long term isn’t very smart.  You actually end up losing money due to inflation and the low interest rates.  You’re better off investing.  There are lots of different ways to start investing and the good news is you can start with as little as $10.
  2. Setup an Emergency FundAn Emergency fund will help you in the future when unexpected expenses come up.  Setting up an emergency fund is simple and is something all young people should do.
  3. Set yourself saving goals – It’s hard to be frugal if you’re not working towards a bigger goal.  My partner and I recently decided to buy a house together.  So we have a goal of saving the deposit.  This energised my saving efforts.  Come up with a bigger goal that you want to work towards and record your progress over time.
  4. Pay off your debts – Before you start investing or savings, it’s often smartest to pay down or pay off completely your debts.  It’s easy to put them to one side and forget they exist, but you’ll be much happier if you actively try and work on any debt.
  5. Stop gambling – Gambling in Australia is a huge problem for many young people.  In the long run, you’re never going to make a profit gambling.  There are services available to help you stop gambling – even if you don’t think it’s a problem.  If you want to gamble, do it on something like Bitcoin where at least you have a chance of making money in the long term.

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How to build an Emergency Fund

An emergency fund is money set aside in a bank account to cover unexpected expenses.  Here is why you need one and how to setup an emergency fund quickly.

Unexpected Expenses

At some point in life we are all going to face unexpected expenses.  These might include:

  • Hospital Visits and emergency care
  • Car repairs
  • Home appliance repairs or replacements
  • Unemployment

These expenses can be in the thousands of dollars.  In a worst case scenario you could be faced with both unemployment and an unexpected expense.  

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