A WORRYING number of Australians live from pay cheque to pay cheque without a reasonable pool of cash savings.
Part of the problem is that we often don't have a firm rein on household spending - and unless you know where the money is going it's hard to set cash aside on a regular basis. Thankfully, help is now available that makes it easier to keep track of personal spending.
A survey by online bank RaboDirect found that 46% of working Australians have the equivalent of just one months' wage or salary tucked away in savings. It means a lot of people could quickly become financially skewered if they lost their job.
Even if your regular income never comes under threat there are good reasons to have a pool of cash savings. It means you won't have to resort to high interest credit cards when unexpected bills crop up, and you get the benefit of additional interest income.
A key starting point in building household savings is to take control of your spending - something that tends to be a weak spot for many of us.
In fact the Australian Securities and Investments Commission (ASIC), says the average household will spend about $69,166 on general living costs in 2012, or around $1,290 each week. It's a fair slice of cash, yet ASIC also found that only one in two of us know exactly how the money is spent.
Along with home loan or rent payments, groceries, fuel, phone and electricity bills, we also make a raft of small purchases. These can easily slip under the radar but they add up over time to leave a gaping hole in our household budgets.
A daily cappuccino for instance can set you back almost $1,500 over a year. A couple of bottles of wine each week could end up costing you around $2,000 annually. A few takeaway pizzas each Friday night could leave a yearly tab of $1,500.
To help Australians enjoy better control of their spending, the government's Money Smart website has launched a new "Track my Spend" app that can be downloaded for free. If you don't have a smart phone, just record everything you buy each week the old fashioned way - by jotting purchases down in a spending diary. It's an easy way to discover where the spending leaks lie.
Once you know where the money is going it's a lot easier to cut back on the least necessary purchases. And that's an essential part of freeing up cash to build savings.
To download the spending app visit www.moneysmart.gov.au - the site also features a handy budget planner.
Paul Clitheroe is a founding director of financial planning firm ipac, chairman of the Australian Government Financial Literacy Board and chief commentator for Money magazine. Visit www.paulsmoney.com.au for more information.
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