Savings goals and how to kick them

With almost $500 billion in our collective bank accounts, according to Australian Prudential Regulation Authority, Australians are serious savers.

Most of us are saving up for something whether it be for a holiday, home deposit or even retirement. But with hundreds of savings accounts on the market, each with unique features, finding the best place to grow your money and achieve your goal isn’t always easy.

One of the most important things to consider – aside from how much you’re trying to save – is how long you have to build your savings stash. The answer will help to determine the type of savings account and investments that are likely to be suitable for your needs.

Goal: short term

If you’re saving for a goal that’s less than one year away, then the only real option for your money is a high interest savings account that allows you to withdraw your balance without penalty and when you choose.

To reach a goal quickly, opt for an account which requires a minimum monthly deposit, of say $200, to kick start good savings habits.

For instance, UBank’s USaver account with a maximum rate of 6.51 percent requires a $200 deposit each month and won’t penalise you for withdrawing your cash before the year is out. Another option is Virgin Money’s Virgin Saver account at 6.51 percent for the first four months and until the end of November Virgin Money will give you a bonus $50 when you set up an automatic savings plan and deposit $1,000 for three consecutive months.

Goal: more than one year

Events that arise less frequently, such as a summer holiday or a big purchase, may allow you to lock your savings away in a short term deposit for one or a couple of years.

It has long been known, but not publicised, that financial institutions are willing to negotiate on their term deposit rates if you ask. But a new online platform at RateCity means you can now do your negotiating online in a secure and private environment and potentially find deals of up to 105 basis points better than an institution may advertise.

Goal: once in a lifetime event

With the average wedding now costing around $50,000 according to Bride to Be magazine, saving up for a large goal such as this requires a longer-term approach. The good news is that longer-term fixed rate accounts offer competitive returns.

Or if it’s a house deposit that you’re saving towards, then your savings options are even greater with the likes of first home saver accounts on offer. These types of accounts provide tax breaks and savings incentives to help you save for a first home with the aid of government contributions, lower tax rates on your interest earning and strict usage rules – so you won’t be tempted to withdraw the balance!

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