Boost your savings with four simple tips

Boost your savings with four simple tips

Sweet-toothed Australians were tipped to spend a combined $185.7 million over the Easter long weekend, up 5.2 percent on last year, with chocolate, seafood and short getaways set to boost spend.

Now that the sugar high has abated, for many of us it’s back to work and back to good savings habits – research shows household savings have climbed to their highest levels in three years.

Financially astute consumers are increasingly realising the importance of having a savings buffer in case of emergency, with at least three months’ salary the ideal amount to have tucked away, ING Direct’s latest Financial Wellbeing Index shows.

According to the report, the average Australian household has $11,798 in their savings account – up 21 percent on last quarter and 37 percent more than a year ago.

But it falls just short of our savings goals, the survey found. Based on the national median salary of $70,365, the desired savings buffer is $15,200.

To bridge the gap, survey respondents said they intend to cut back on discretionary spending and follow a stricter budget, with 15 percent planning to take fewer holidays this year, 41 percent following a stricter budget and a third dining out less often, ING Direct reveals.

If you’re among the 29 percent of Aussies who already contribute to savings each payday, then good on you! If you’re among the 21 percent who wants to set a savings goal, here are some simple tips to help get you started.

1. Start at the end

Find a reason to save – a new car, your first home or a holiday – and make it your motivator. If a photo of a tropical island on your computer or phone screen helps you to save for a holiday, do it.

The key is to make saving fun, rather than it feeling like a chore, said financial advisor Deborah Kent, owner of Integra Financial Services.

“But never set a goal that’s too long. Set short-term goals so you can attack it in chunks – it’s more manageable that way,” she said.

2. Watch it grow

Once you’ve decided on a goal it’s time to figure out how to achieve it by putting a savings plan in place. Getting into the habit of making regular savings – even if the amounts are small – can be more effective and motivating than doing so on an ad-hoc basis. Use a site like RateCity to compare savings accounts and consider setting up a scheduled transfer into your saver to take place a few days after your salary goes into your account.

3. Banish bad debts

Debt is a concern for many Australians thanks to a range of factors including easy access to credit cards and a tendency to spend more than we earn, says Paul Clitheroe, chairman of the Australian Government Financial Literacy board.

“A key starting point in getting control of debt is to know exactly what you owe. You’d be surprised how many people don’t have a firm rein on their credit card balance or home loan,” he said.

Give your finances a “health check” and consider refinancing any products that aren’t offering competitive rates or aren’t working for your circumstances. Doing so could free up a couple of hundred dollars to add to your savings plan or help pay down debt.

4. Keep track and reward yourself

Finally, remember saving isn’t about depriving yourself so budget in a small reward whenever you reach a savings milestone so you have something to work towards.

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Learn more about savings accounts

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.

Can you have multiple ING savings accounts?

Yes, you can open up to nine accounts with ING at any particular time. If you’re saving money for various goals, such as buying a car or taking a holiday, you can name each of your multiple ING savings accounts differently.

To get a Savings Maximiser account, you’ll need to deposit more than $1000 every month and make at least five additional purchases. If you also want to grow your savings, from 1st March 2021, you can earn up to 1.35 per cent per annum variable interest on one account with a balance of up to $100,000 when you also maintain an Orange Everyday account.

With ING, multiple savings accounts can help keep track of all your savings goals. All the accounts offer flexible withdrawals where you can withdraw as low or as high as you want without impacting your earning interest rate. However, you can only earn the bonus interest on one account. To apply for a Savings Maximiser account, you can visit ingdirect.com.au.

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. 

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.

Should I open a Commonwealth locked savings account?

If you have trouble saving money, a Commbank locked savings account could be a potential solution. A locked savings account won’t let you make withdrawals and as such, it can help you grow your savings balance if you keep topping it up. 

The Commonwealth locked savings account advertises high-interest rates and minimal maintenance fees, along with a host of other incentives that will encourage you not to touch the money. 

The account offers a higher interest rate for each month that you make limited or no withdrawals, as well as regular deposits. 

To qualify for a Commonwealth locked savings account with the advertised features, you will need to fulfil specific criteria such as:

  • Depositing a fixed minimum amount into the account every month.
  • Making a fixed number of deposits each month.
  • Making a minimum or no withdrawals each month.
  • Maintaining a minimum account balance.

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.

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 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.

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 Westpac locked savings account?

The Westpac locked savings account (also known as "Westpac Life") can help customers reach savings goals faster through bonus interest. Customers receive 0.2 per cent standard base interest with a variable bonus rate of 0.35 per cent when the closing balance at the end of the month is higher than the opening balance.

There are some conditions to earn the bonus interest on Westpac's locked savings account, though. First, you’ll need to increase the balance each month either through a deposit or not making any withdrawals, and then link it to a Westpac Choice account and make at least five eligible payments using your debit card. Please consult your bank as to what an eligible payment is. 

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.

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

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.