Become a money savvy tenant

Become a money savvy tenant

Australians all around the country are increasingly feeling the pinch in their pockets. As a result, your savings account might be looking increasingly sparse as the cost of living down under steadily climbs. 

As David Jacobs, Dilhan Perera and Thomas Williams wrote in a Reserve Bank of Australia bulletin for this year’s March quarter:

“The cost of living is a source of significant concern for households. This is likely to reflect concerns about both the level of prices and the rate of inflation.”

Indeed, National Australia Bank’s Consumer Anxiety Index rated it as the biggest concern for consumers over the March quarter. The cost of living even ranking higher than health and government policy. 

No doubt, those who have recently flown the coop have felt this more than anyone else. Living away from home for the first time is hard enough without having to juggle your finances. These tips, however, should help you stay afloat and keep your savings account in order while you continue your renting adventure. 

Be savvy with living costs

The most basic way to save money while renting is of course to be careful with how you spend it. True, some costs are unavoidable – power and water are pretty essential. And unfortunately, the price of electricity continues to rise, increasing by 102.5 percent over the past 10 years until 2012, according to the latest Energy Supply Association of Australia report.

But you can limit how much you spend on these utilities. Most landlords will cover the service charges for water but make sure you check this on your rental agreement before you sign. You will have to cover all electricity costs so be vigilant with turning off appliances such as televisions, lights and kitchen technology at the wall. Leaving these on all day and night may not seem like much, but it can make a huge dent when the bills come in. 

Limit your expenses in other ways, too. With petrol prices rising higher, start using public transport or cycling more. When it comes to food, shop around for the cheapest prices – you could even have the whole flat pitch in for some communal food that everyone will use, such as vegetables, dairy products and spices.

Get a joint account

Speaking of pitching in, while you’re all living under the same roof, you’re all in it together. If you have a stable living situation where no one’s going to leave anytime soon, try opening up a joint account for the whole flat. This can make the process of paying off all of your various weekly expenses much faster and less complicated.

Money for rent, groceries, bills and miscellaneous expenses can all get deposited straight in from the various flatmates’ accounts. From here, you can set up automatic payments to take care of bills and the rent, which means less late penalties. Some utility providers may even offer an early-bird or on-time payment discount, so use this to your advantage!

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Learn more about savings accounts

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.

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.

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 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

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

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.

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. 

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.

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 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.

What is an ANZ locked savings account?

An ANZ locked savings account locks your money and prevents you from spending. You may use a standard savings account as the account where your salary is deposited. You can then withdraw funds when needed, but aren’t able to make purchases with it. However, this account may not grow much as the continual withdrawing of funds will limit the interest you can earn.

With a locked savings account in ANZ, you know your savings will grow because you can’t access the money. You can also qualify for a bonus when you deposit at least $10 per month and don’t make any withdrawals. To help you with this further you can set up an automatic transfer from your regular ANZ savings or transaction account so you don’t forget to make a monthly deposit.

Your ANZ locked savings account offers you a base interest rate of 0.1 per cent per annum plus an additional bonus interest of 0.49 per cent per year. The interest is calculated daily and credited to your account on the last working day of the month.

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.