Eight ways to save $8000 this year

Eight ways to save $8000 this year

Making small changes in your life can have a big impact on your savings – and even help you budget better. Take control of your money with these eight simple tips from finance guru Ross Greenwood and your bank account will be richer for it.

“The cost of living is up and saving can be hard. But we’ve done a few calculations and worked out that you could save up to $8000 a year and, surprisingly, it’s easier than you think,” he told Nine’s Today show.

Say no to bank fees

Australians wasted around $53.5 million accessing their own money at the ATM in January, simply by using automatic teller machines serviced by a bank that is not their own, according to RateCity calculations.

Agreeing to a non-account holder surcharge of around $2 per transaction may seem minimal at the ATM, but as a nation we forked out more than $670 million in the past year, making it an expensive convenience.

“If you don’t use your own ATM you’re going to be charged $2 or $3 a time,” said Greenwood. “Do this once a week; that’s going to add up to $150 a year.”

Slash food bills

Australians wasted an estimated 4 million tonnes of food last year, with food accounting for around 40 percent of all household waste. By letting food go to waste we’re binning more than $1000 per person every year.

To reduce the impact on the hip pocket – and the environment – Australians should plan ahead to consume the food we buy or consider buying less to, says Greenwood.

“It’s also about shopping smart,” he said. “Take branded flour, for example, at $2.99, yet the generic flour is just $0.95. It’s the same stuff! If you shop smart and generic you can save up to $450 a year.”

Reduce restaurant bills

Asking your waiter for a discount on the bill may not be a realistic option. But there are ways to enjoy dining out without breaking the bank. Taking a family of four out once a week could cost you $60 or $70, he said.

“That could cost you up to $3500 a year. If you want to save $1700, do it once a fortnight.”

Lottery isn’t a savings plan

The likelihood of winning lottery is around one in 45.5 million, but those odds don’t deter many Australians with millions queuing up for the chance to win the big prize money.

Most of us would be better off saving the cost of the ticket, according to Greenwood: “A mega-pick costs $25 a week in Oz Lotto, which equates to $1750 a year. Sure if you can afford it no problems, but if you can’t it’s an easy saving.”

Coffee is an expensive habit

Research shows that Aussies spend around $770 million on coffee beans and instant coffee for brewing at home and that’s not taking into consideration the amount we spend on takeaway coffees.  

It’s a big call, but Greenwood suggests cutting out the daily grind to save a bundle – at $3.50 a day your coffee habit is sucking up a whopping $700 a year.

“I love coffee, but the truth is do I really it or is it something that’s a bit of a luxury?”

So are cigarettes

Take this for consideration, says Greenwood. “A packet of cigarettes could cost you around $16. Smoke three packets a week and that’s $48 and over the course of a year it’s $2500.”

“If it’s not all about your health, then certainly it’s a cancer on your budget,” he said.

Paying for unused memberships

Anything you subscribe to buy don’t use is a waste of money. If you pay a monthly gym subscription, for instance, you’ll be spending around $70 per month. If you never or rarely go you could be saving $840 a year.

“The same applies to magazine subscriptions, book clubs and wine offers – these are one area you can cut back,” he said.

Do you really need it?

Impulse shopping is a big money waster, says Greenwood. So sleep on it before you buy.

It’s easy to save money by cutting out or reducing some things you buy – and changing habits. Try one or two of these money-saving tips and watch your savings grow.

 

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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.

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.

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.

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 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 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 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.

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 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.

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 can I get a $4000 loan approved?

While personal loans and medium amount loans don’t offer guaranteed approval, there are steps you can take to help increase the likelihood of your application being approved, including:

  • Fulfilling the eligibility criteria (providing ID, proof of residency, proof of income etc.)
  • Checking your credit history (you can order one free copy of your credit file per year, and make sure that there aren’t any errors that may be bringing down your credit score)
  • Comparing carefully before applying (making multiple loan applications can mean having your credit checked multiple times, which can look bad to some lenders and reduce your chances of being approved by them)

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