Embrace minimalism and save

Embrace minimalism and save

Minimalism is a relatively new lifestyle trend that encourages the decluttering of our lives and minds by removing unnecessary “things.”

While this is meant quite literally, with adopters of the lifestyle choosing to live with 100 items or less only, it is also a philosophical approach to life.

Minimalists seek to reduce the importance they attach to things and instead reroute that energy into focusing on the more important things in life like relationships and passions. 

While it may seem extreme, on some level most of us could probably benefit from removing some extra clutter from our lives in order to clear our homes and heads. The benefits to decluttering and deciding to live with less are widespread but will almost certainly positively contribute to your bank balance. 

If you’re interested in seeing how a minimalist lifestyle could help improve your bank balance, try these steps to ease into the movement: 

Stop shopping

Set yourself a challenge to stop shopping for a certain period of time. This should include buying anything except the very essentials of life such as food, and even then you should use what is already in your house first. Begin with setting a day of the week in which you don’t buy anything and then progress from there until you can go a month or more without purchasing a single item. This may require you to be inventive in finding things that you need or want but is a great chance to use services such as the library or to join a local swapping group to swap goods.  

Related stories

Use things you already have

The flow on from this first step will be that you will be forced to use things that you already have. This may mean mending things when they break to extend their life or being more conscious of the things we have in our home. Often we can buy products that end up buried beneath clutter which we then forget to use. If you are spending less time purchasing things, you will find you get more use out of these otherwise forgotten items. 

Sell things you don’t use

The last step in this minimalist crash course is selling things that you don’t use. Now that you are more aware of what clutter you have lying around it’s time to get rid of the things you don’t need. This is the hardest part of the process and you will realise the truth to the statement that we place too much emotional importance on things. Items that we often associate with sentimental memories but that we don’t use, like books or an old piece of furniture, may be hard to let go of but this will be the true test of your commitment to a decluttered life. Making some extra cash in the process may help to ease the pain and it gets easier the more you get rid of. 

The ultimate goal

Some say that the ultimate goal of all this decluttering is freedom. Freedom from things and our attachment to them and our desire to have more. Even if you don’t quite get to that stage, a good spring clean and some extra money in the pocket never hurt anyone. 

Related links

 

 

Did you find this helpful? Why not share this article?

Advertisement

RateCity

Money Health Newsletter

Subscribe for news, tips and expert opinions to help you make smarter financial decisions

By signing up, you agree to the ratecity.com.au Privacy & Cookies Policy and Terms of Use, Disclaimer & Privacy Policy

Advertisement

Learn more about 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.

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 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)

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.

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.

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 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 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 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 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 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.