How can I save while providing for a family?

How can I save while providing for a family?

Religiously putting money away into a savings account isn’t easy to do, and goes against a lot of our natural instincts. But it’s so much harder when you have to worry about running your household as well. How can you regularly put money aside while maintaining order in your home?

1. Have a family goal

Saving can be a team sport. Well, it’s certainly not a spectator sport! Money won’t magically appear in your account, nor will your credit card debt decrease unless you actively do something about it. But it maybe overwhelming to try and save up all on your own, while the rest of the family carries on as per usual.

It can be easier to save up when others are making the journey with you, whether they’re helping you to decrease costs or are putting aside money of their own. An easy way to get the whole family on board is to decide on a goal that everyone wants to achieve —  perhaps saving up for a holiday?

While parents can put away some of their weekly earnings towards this goal, kids can help by saving their pocket money for spending cash, and everyone can chip in by reducing costs where practical. A savings account calculator could help you keep track of it all.

2. Sacrifice in some areas

This is the hard part. While you can usually find some way to put aside a bit of money every now and then, the real kicker is reducing costs. Most of the time you can do this quite simply — changing brands, shopping at a cheaper super market or taking a drive to the butcher or veggie shop to save more on those items. But there are some areas in which you shouldn’t scrimp.

Going to a bad hairdresser or barber is not a good way to save money, for example. The main reason is that you won’t feel good about yourself for the next 4-6 weeks until your next haircut. And if you don’t feel good about your money-saving tactics, it can be easy to feel dejected by the whole exercise.

Rather, spend money where it is necessary, but stop and think about the little things that can save you money.

3. Stop and think

How long is your goal’s timeframe? A few years, five maybe? If you’re aiming long-term, you should adjust your savings strategy. Putting money in a savings account is great, but if the interest charged on your credit card or car loan is 10 per cent higher than what you can earn through the bank, killing these debts might work out better in the long run.

To get the family on board with paying off the car, try creating a chart that tracks progress — one with the standard payments, and one that you fill out as you go. Display it in a prominent place that the whole family can see and update it every time a payment is made. You’ll be surprised how much support you can rally when there is a visual goal for everyone to work towards. Especially one that has an element of competition to it.

4. Competition

While charts and stickers are great for younger kids, teens need something a bit more age appropriate. How about holding a competition at home for who can save the most every week? The winner could receive a small donation towards their savings, or could dictate the Friday family meal — within reason, of course.

Making saving a more fun task is an easy way to instil this valuable life skill in your children, while providing a real life issue over which the family can bond, strategise and banter.

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Learn more about 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.

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 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 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 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. 

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.

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 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 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 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 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.

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.