Save hundreds of dollars and keep warm this winter

Save hundreds of dollars and keep warm this winter

RateCity shows you how you can save more and still keep warm during the winter months ahead.

June 16, 2010

As the first month of winter has hit and the official cash rate remains steady (for now), it’s time to take this opportunity to get in control of your savings and not let the cold affect them too.

Just by cutting back and making small changes to your spending habits, you could potentially save hundreds of dollars. To help you save this winter, here are some ways that you can consider implementing to cut back your expenses and essentially keep yourself and your savings account warm.

Sale time. Most major stores have sales at the beginning of winter. This is the best time to grab a bargain and avoid paying full price. Also, if you know of someone who has a birthday or you need to buy a present for an upcoming occasion, sale time is a great time to buy and save that little bit more.

Cook in bulk. Soups are not only hearty and warm in the winter months but they are also easy to make, very cheap and can feed a family for days. Make a big batch up and store in containers to freeze, then thaw and reheat for dinner or lunch. Other cheap meals to make in bulk are casseroles, curries and stews, then you can make your own bread to accompany them.

Recycle. If your clothing from last season is still wearable but no longer fits you because you have lost weight, or there is something that you want fixed or changed, why not invest in visiting a good tailor. They can mend your items so you can get another season out of them and save you having to spend more money buying something new to replace it.

Knitting. Instead of buying a scarf you probably “could have made anyway”, why not do just that and make it yourself? You can pick up great knitting books at some second-hand book shops or online, or borrow one from a library. Not only can you show off your talents and get a chance to be creative but it’s fun and it could save you money.

Energy-efficient heaters. Some heaters can be expensive to use as they chew up a lot of electricity to keep you warm. If you really need to use a heater in your house, look for one that uses the least amount of energy. Not only will you save more on your electricity bill but you will help the environment at the same time.

Winter is a great time to send your savings into hibernation and increase your money for summer. If you were to invest the money that you could save from cutting back during the winter, let’s say $500, and put this into a high-interest online savings account, such as RaboDirect at 6.40 percent. You could earn an extra $32, which could be a night out for two to the movies.

 

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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 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.

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. 

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 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 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 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.

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.

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.

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.