Let your hair down for the Cup without blowing the budget

Let your hair down for the Cup without blowing the budget

Picture this.  You’ve managed to squeeze a long lunch out of your boss. The team is collectively putting down their mice and heading out to hook the horses. The champagne is flowing, the tips are running hot and the wallet keeps flapping open and shut, open and shut.

Sounds like the first Tuesday of every November, right?

The difference is this year, you’re determined not to fall into complete financial ruin. But is this actually possible?  Here’s how we suggest you play it this time.

With every winner, there are a multitude of losers

There’s a reason why the big gamblers keep clear of the Melbourne Cup – often impossible to pick – or if it does happen to be the favourite, the odds are so low it’s just not worth the punt. There’s nothing wrong with having a bet or two on the cup. Put a cap on your betting budget and try build in some common-sense.  Quinellas are popular, if you know what it all means, otherwise stick with an old fashioned ‘win or a place’ and be happy with a warm hug from a colleague who nailed the trifecta at the end.

Bet with your head, not with your heart

Red might be your favourite colour but it’s not going to make your horse run any faster.  Neither are stripes.  If you’re going to do some betting, pick up a form guide and look at the stats. It’s also good to heed some advice from experts in the paper.  They’ve been doing this horse betting thing for a while so, no offence, but they probably know better.

There’s no shame in a sweep

Yes, it’s the budget version of betting on the Melbourne Cup, but at $2 or $5 a horse, it’s also the smart way.  Plus, you get to rubbish your mates the entire morning if they draw a dud horse. Of course, if you draw the doozy, make sure you buy another ticket to dodge being picked on.

Avoid package deals – if you can

It’s not just the bookies who are making a buck on Melbourne Cup.  Bars and restaurants across the country love putting on lunch packages, often at exorbitant rates.  Do the maths and work out whether the package is worth it.  More often than not, you’ll be better off finding a restaurant that offers their normal lunch menu – just make sure they have a TV that works.

Stay local

Heading out to the races can be quite an expense.  First up.  Jeans and t-shirt are oh-so not acceptable. Secondly, getting there and back will cost you, particularly if/when you decide that only a stretch limo – or maybe a black Uber – will do.  To save yourself from financial ruin, why not meet your friends at the local pub?  No-one will look twice if you don’t have the latest fascinator perched perfectly on your head.

Always have a plan B

If you wake up on the wrong side of the bed, walk under a ladder or start thinking obsessively about black cats maybe you should leave the horse betting for another day.   The safer best is to stick $5 on a rate cut (or hold) and watch your dreams come true live on Sky Business. Just think, with the winnings you’ll be able to buy yourself a beer at the pub, and possibly one for your mate, all without having to go near a suit and a tie.

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Learn more about savings accounts

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 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.

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. 

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 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.

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.

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.

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

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.