Most Australians only tend to use a savings plan for specific goals, and once they are met, slip back into bad habits. Once we have saved enough and paid off all the bills, how can we maintain the motivation to keep saving? Jack Han investigates.
December 1, 2009
The latest Household Savings Ratio released by the Australian Bureau of Statistics show that households are in negative savings, meaning that Australians have been spending all of their disposable income, and digging into their savings for more.
Clearly, the philosophy of ‘saving for saving’s sake’ is not widely practised, but there are hopes that this will change as savings accounts become more and more competitive following the recent rate hikes.
When asked what to do with excess cash, only 35 percent of Australian respondents admitted that they would pay off debts, according to an international Synovate survey. Most Australians are comfortable with keeping debts, because they rarely calculate the long-term losses they incur from not paying it off as soon as possible.
And when debts have been paid off, excess cash will instantly be spent unless there are specific items to save up for. For this reason, building the right savings mentality should require you to always be saving for more than one thing.
By having overlapping goals, your savings trend will be consistent, rather than broken up with gaps of excess spending. This means that as time goes by, you will rely on saving as the primary method of purchasing, rather than debt accumulation.
Different savings accounts can also have a huge impact on your attitude towards saving. For example, on savings of $20,000, a 5 percent account will collect an extra $608 in interest per year compared to a 2 percent account. Simply knowing this can give you the additional motivation to hunt for the best accounts in Australia to make sure your savings efforts give you the highest returns.
Savings rewards do not always have a monetary value. The pride of taking responsibility for your personal finances is enough reward for many savvy savers. Luckily, this discipline often leads to being able to afford a few extra holidays and healthier bank balances.
If you are one of the many Australians who get sick of saving after meeting a goal, or find that you spend more than you earn, then you need to compare savings accounts today to find a product offering competitive rates and incentives for sticking to a savings plan. Start thinking of goals for the week, month and year, and cure yourself of savings sickness forever.