Battle of the sexes: Who are better savers?

Battle of the sexes Who are better savers?

RateCity looks at whether men are really better at saving money in comparison to women and shows you tips on how to save no matter what you earn.

June 16, 2010

Are money and your savings a regular topic of discussion with your partner? Do you and your friends continually debate about which sex saves more? RateCity settles this battle for you with a report from AMP.NATSEM.

According to AMP.NATSEM’s Income and Wealth Report, neither men nor women are exceptionally good at saving. However, it finds the typical male is a slightly better saver than a typical female. Overall, even though both sexes do manage to save some money, a typical man will save approximately $620 each year while a typical woman will save about $150.

The research examined the savings between men and women from different age groups, which showed some interesting patterns. A typical woman between the ages of 25 and 34 years of age saves $380 more than men per year, who only save $240.

A typical woman in the 55 to 64 year age group saves $1660 per year while men only save $1130, that’s a difference of $530 more. The five remaining age groups; 15 to 24, 35 to 44, 45 to 54 65 to 74 and 75 and older, showed that men saved more than women.

The reasons for these differences in savings are due to a number of factors according to the report, mainly because women often take time out of the workforce to give birth and raise a family. When and if they do return to work, they may work part-time while the children are young, while at the same time men usually continue to work full-time and so they have the opportunity to save more.

Another major factor is that the average full-time working woman earns less than average full-time working male. According to recent statistics from the Australian Bureau of Statistics (ABS), males earn on average $1178.70 per week, which is approximately $415 per week more than females at $763.80 per week. Obviously this difference per week will affect the amount that women are able to save if they are earning less.

Whether you earn more than your partner or much at all, here are some tips that may help you save a little more for you:

Budget. Calculate your incomings as well as your major outgoings and then you can work out a budget and see where you are overspending and how much you can put into your savings account each month.

Invest. Transfer your savings from an everyday transaction account into an online savings account to earn more interest. Compare online to find an online savings account that earns a higher interest rate and see your money grow.

Cut back on expenses. Look at ways in which you can cut back your spending, especially with things that you do regularly. For instance, if you visit the hairdresser each month for a colour why not consider doing it yourself at home. Hairdressers can charge more than $100 for a colour, whereas a DIY kit is about $15 from the supermarket, that’s a saving of at least $85 right there.

Reduce going out. Limit the amount of times you go out, whether it is dinners, drinks or catching up for a coffee. Why not invite your mates around to yours instead or try and cook at home more often, it is cheaper, healthier and better for you all-round.

Avoid impulsive purchases. Think twice before making a big purchase on something that you don’t really need. If you don’t think you really need it, don’t get it and put that money into your savings instead.

Look for alternatives. There are always less-expensive alternatives to almost everything, including groceries, clothes, house items and make-up. Shop around to find a bargain and save more money. Try shopping online or at factory outlets so you don’t pay full price.

 

 

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Learn more about savings accounts

How to make money with a savings account?

Savings accounts make you money by earning interest on your savings. The more money you deposit, the longer you leave it in the account, and the higher the account’s interest rate, the more interest you’ll be paid by the bank or financial institution, and the more your wealth will grow.

To make sure your savings account makes money and doesn’t lose money, it’s important to maintain a large enough minimum balance that the annual interest earned exceeds any annual fees charged on the account.

How much money should I have in my savings account?

A good rule of thumb when working out a minimum balance for your savings account is to make sure that you’ll earn more in annual interest on your savings than what you’ll be charged in annual fees.

If you’re saving with a specific goal in mind, prepare a budget so the interest you earn on your deposits will help you efficiently reach this goal. Online financial calculators may be helpful here.

What is a savings account?

A savings account is a type of bank account in which you earn interest on the money you deposit. This makes it one of the easiest and safest investment tools.

Can you set up direct debits from a savings account?

It’s not usually possible to set up a direct debit from your savings account to cover ongoing expenses or bills, as savings accounts are structured around growing your wealth by earning interest on regular deposits, and discouraging withdrawals.

Some transaction accounts allow you to set up direct debits and also earn interest, though you may not enjoy as much flexibility as a dedicated transaction account, or get as high an interest rate as a dedicated savings account.

Can you set up a savings account online?

Yes. Several large and small banks offer online applications for savings accounts, and there are also online-only financial institutions to consider.

Online-only savings accounts are often less expensive than other savings accounts, though they may not offer the same flexibility, features, or face-to-face service as more traditional savings accounts.

Can you have a joint savings account?

Yes. Joint savings accounts can be useful for two or more people wanting to combine their savings to meet shared financial goals, including spouses, flatmates and business partners.

Some joint savings accounts require all parties to sign before they can access the money. While less convenient, this extra security can help encourage all parties to meet their shared financial goals.

Other joint savings accounts allow any of the account holders to access the money. These accounts can be convenient for financially responsible couples that trust one another implicitly. 

How to open a savings account for my child?

Some banks and financial institutions allow parents to open a bank account for their child as soon as it is born, and start depositing funds to go towards the child’s future.

Children’s savings accounts generally don’t have fees, and are structured to help develop positive financial habits by limiting withdrawals, encouraging regular deposits, and earning interest on the savings, similarly to standard savings accounts.

How do I open a savings account?

Opening a savings account is a relatively simple process. If you’ve found an account with a suitable interest rate, you’ll just need to get in contact with your chosen lender via a branch, phone call or hop online to begin the process. 

You may be required to provide:

  • Personal details, including identification (driver’s license, passport etc.)
  • Tax file number
  • Employment details

How does interest work on savings accounts?

The type of interest savings accounts accrues is called compound interest. Compound interest is interest paid on the initial deposit amount, as well as the accumulated interest on money you have. This is different from simple interest where interest is paid at the end of a specified term. Compound interest allows you to earn interest on interest at a higher frequency. 

Example: John deposits $10,000 into a savings account with an interest rate of 5 per cent that he leaves untouched for 10 years. At the end of the first year he will have $10,512 in savings. After ten years, he will have saved $16,470.

What is the interest rate on savings accounts?

As banks frequently change their rates, the most accurate way to look at interest rates on savings accounts is to use a savings accounts comparison tool. When you look at the savings rate check what the maximum and minimum rates are. Often banks will offer you a promotional rate for the first few months which is competitive, but then revert back to a base rate which can sometimes be less than inflation. Ongoing bonus rates are often a safer bet as they will keep rewarding you with the maximum rate, provided you meet their criteria

What is a good interest rate for a savings account?

A good rule of thumb to keep in mind with savings accounts is to look for a rate that is higher than the CPI inflation rate. This number is constantly changing, so check the Reserve Bank of Australia’s page. If you aren’t earning interest above this then the value of your money will go backwards over time.

Can I overdraft my savings account?

A lot of savings accounts won’t let you overdraw. Some will allow this feature but you’ll need to apply first. It’s best to read the fine print and check with your lender whether this is a feature they offer. It can be a helpful addition, but as your lender can charge you a fee as well as interest for going into negative numbers, it’s best to avoid overdrafting when possible.

Who has the highest interest rates for savings accounts?

As banks frequently change their rates, the most accurate way to know who currently has the highest interest rate is to use a savings account comparison tool.

Can you direct deposit to a savings account?

Yes. You can make one off payments or set up regular direct deposits into a savings account. This can be organised easily through online banking or by making deposits in a branch. Talk to your lender to find out the easiest way for you to set up direct deposits.