Save for your overseas dream holiday in 4 weeks or less

Save for your overseas dream holiday in 4 weeks or less

While travelling is a favourite hobby of millions of Australians, funding the trip of a lifetime can often seem like an impossible task for the undisciplined saver.

The good news is that with a strict tightening of the belt, your airfare to one of Australia’s top three destinations can be saved in a matter of weeks.

The top three travel destinations for Aussies heading overseas in 2015-16 are New Zealand, Bali (Indonesia) and the United States of America, according to ABS Statistics released this month. While our favourite destinations haven’t changed much in the past 10 years, the amount of Australians taking a short holiday has grown rapidly.

“Australians made 1.3 million short-term trips across the Tasman to New Zealand last financial year, 452,300 more trips than we made 10 years ago,” said Libby O’Toole from the ABS’ Migration Analysis and Reporting Team.

Short-term resident departures to Indonesia have increased more than five times over the last 10 years and the USA rounded out the top three in 2015-16, more than doubling the 2005-06 figure at more than 1 million trips.

Related stories

So how can you join the millions of Australians flying out on holidays just weeks from now?

For most Australians, discretionary weekly spending goes on four main things – food, alcohol, clothes and recreation. Combined, for a single person under 35, it is estimated these four things take a $257 chunk out of a weekly pay-check (ABS Household Expenditure Survey 2009-10).

Halving spend in each of these categories could see you comfortably on a plane to Denpasar in 3.4 weeks or Auckland in 2.4 weeks when looking at an average return air fare. Of course a trip to the USA is going to take a longer term commitment so prepare to spend about 11 weeks in hard-core saving mode to reach the sandy shores of Los Angeles.

RateCity’s top tips for speed saving

If you have a specific savings goal in mind and you’re on a deadline, then try these handy tips to get there sooner:

  • Suspend your memberships and pocket the savings – this could mean saying goodbye to luxuries like Netflix and yoga class temporarily.
  • Put all your coins in a jar at the end of the day and watch your change add up over time.
  • Only buy food that’s on special and make meals in bulk so you have left overs to pack for work.
  • Put all non-essential items you want to buy on a “wish list” to revisit after you’ve achieved your goal.
  • Enforce an alcohol ban on yourself until your goal is reached (then celebrate with a glass of champagne). 

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 submitting this form, you agree to the RateCity Privacy Policy, Terms of Use and Disclaimer.

Based on your details, you can compare the following Savings Accounts

Advertisement

Learn more about savings accounts

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 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 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.

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.

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 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 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 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

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.

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 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 have multiple ING savings accounts?

Yes, you can open up to nine accounts with ING at any particular time. If you’re saving money for various goals, such as buying a car or taking a holiday, you can name each of your multiple ING savings accounts differently.

To get a Savings Maximiser account, you’ll need to deposit more than $1000 every month and make at least five additional purchases. If you also want to grow your savings, from 1st March 2021, you can earn up to 1.35 per cent per annum variable interest on one account with a balance of up to $100,000 when you also maintain an Orange Everyday account.

With ING, multiple savings accounts can help keep track of all your savings goals. All the accounts offer flexible withdrawals where you can withdraw as low or as high as you want without impacting your earning interest rate. However, you can only earn the bonus interest on one account. To apply for a Savings Maximiser account, you can visit ingdirect.com.au.

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.