Five ways to avoid a money splurge

Five ways to avoid a money splurge

We’ve all been there – your credit card is burning a hole in your pocket, you’ve had a tough day and you find yourself at your local Westfield shopping centre. 

Now, if you’ve got bills mounting up, mortgage repayments to make and an empty fridge, it would be rational to pull back and get yourself out of the shops quick smart. However, being rational is sometimes easier said than done.

Here are some of RateCity’s top tips to avoid a blow out next time you’re shopping:

1. Avoid shopping when you’re hungry

Have you ever tried to fit in a quick supermarket shop before your lunch break or on your way home from work before preparing dinner?

When you’re hungry, you may find yourself throwing expensive yet unneeded snacks into your trolley, such as biscuits, chips, ready-made meals and decadent desserts. 

Don’t shop when you’re ruled by your stomach. Instead, complete your grocery shopping after a meal and always take a list with you. 

2. Plan holidays carefully

It’s easy to fall into a pattern of spending whatever you like when you’re on a tropical beach or exploring mountainous regions on the other side of the world. 

But you may find that reality comes back to bite you when you return from your holiday and regular payments are piling up.

Opening a dedicated savings account for your next big holiday is a good way to keep your spending in check. You might splurge on a five-star hotel and cut down on your dining out expenses when you get to your destination. Or perhaps you’re more concerned with enjoying all the activities on offer at your holiday location, in which case basic accommodation may suffice.

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3. Don’t get lured in by freebies

The thought of getting something for nothing might seem like a good deal, but always consider how much you’re really spending — and whether you even need the item you’re purchasing. 

For instance, is it really worth buying an extra piece of clothing in order to get the free shipping bonus? Perhaps you’ve fallen for two-for-one deals because you like the idea of a bargain, but don’t need the item in question. 

Ask yourself: Would I pay for this item at full price? If the answer is an outstanding no, then rethink why you’re really handing over your hard-earned cash.

4. What’s your Friday night plan?

When the end of the working week rolls around, it can be easy to head out for a drink or a delicious meal to welcome in the weekend. 

But you may find that you’re more willing to flash the cash when you’re in relaxation mode. Set yourself a limit for your weekend spending when you’ve got time on your side and a generous attitude. 

Heading out for a few refreshments is all well and good for a spot of team bonding, but shouting round after round of drinks is going to sting your wallet! It might pay to leave your credit card at home in such situations.

5. Entertain without spending a fortune

Hosting a dinner party is great fun, whether you’re feeding relatives or friends. 

However, the desire to impress can cause you to overspend — you may not even need all the food you buy. Consider preparing sharing plates, a few inexpensive pasta dishes and a lightly-dressed salad. Guests will be able to pick and choose what they want, leaving you with less food waste and a lower food bill. 

Consider hosting a barbecue in the summer — provide the salads, breads and sauces and ask guests to contribute meat.

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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 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

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.

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.

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.

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.

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 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 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.

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

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.