Top 10 money saving resolutions you should consider

Top 10 money saving new year's resolutions you should consider

Getting towards the end of the first month of 2015, many people will have their resolutions well and truly sorted. But if you’re the type to procrastinate, or you neglected your savings account in your resolution considerations, maybe you could benefit from a couple of these resolution this year.

1. Change a habit

Which habit costs you money needlessly every day? Prime examples might be online shopping, smoking or buying chocolate bars at lunchtime. These are habits that have negative effects, but are also expenses with no real long-term benefit. Choosing to kick a habit that can kill two birds with one stone might be more motivating than simply deciding to save money.

2. Swap a habit

Some habits are too good to give up. Maybe you enjoy a cup of coffee at a local cafe every Sunday or perhaps a few drinks with friends after work on a Friday. How can you keep these indulgent and social activities without pouring money down the drain?

Swap out your regular fix for a less expensive option. If you want to enjoy a drink with colleagues after work, why not find an establishment with a cheap happy hour? Or invite them round to your place and get a box of beer from the supermarket. You can still enjoy the same social event at half the cost to your credit card.

3. Pay attention

It’s easy to spend more than we intend to when you don’t really take notice of price tags. You may walk into a shop determined to buy bread and milk and walk out with exactly those items, yet still have paid too much. Taking half a minute to scan the grocery aisle for comparable brands or varieties at lower prices could save you a few dollars on just a couple items.

Multiply this out for a big shop and you could be better off by a whole lot. Think about doing this every weekly shop and all of a sudden you’ve saved a fair chunk this year.

4. Bank better

Banking can be another financial blind spot. Many consumers don’t pay attention to their fees, account structures or any number of items that could be costing them in charges and interest. The reason? They’ve always banked with them.

There’s no reason not to switch to a different provider if it makes more financial sense. The same goes for phone companies, utility providers and more. Laziness is the enemy! Don’t be tempted to stay with what you know because it involves effort to change. Actively look at the cost of car loans, power bills, lawn services and more. And remember to reassess these at a later point — things change!

5. Thrift your way wealthy

Have you ever heard the expression “dress for the job you want, not the job you have”? While there is some merit to the idea, being excessive in your expenditure won’t get you ahead in life (most of the time). It’s very possible to choose less expensive options when shopping for clothes, furniture, food and more, and receive quality that is similar or the same.

6. Cancel your gym membership

This could almost go under kicking bad habits. If you are one of the people that resolved to get fit last year, bought a gym membership and went twice, you’re not exercising anything but your wallet.

Save your credit card the worry and don’t commit to long-term contracts if you question whether you’ll maintain usage. You could probably buy some home exercise equipment for much less than the cost of a gym membership, or just exercise outside with friends for free!

7. Spoil yourself

Did you think saving was supposed to be hard? Well, not always. Sometimes treating yourself can be exactly what you need to maintain your motivation levels. You can also use special outings or expenses as short-term goals to help you reach your long-term ones.

8. Connect with your spouse or family

Being more honest and open with your spouse or family is a great way to improve relationships at home, making it a worthy resolution just on its own. However, it also has the added benefit of making it easier to talk about sensitive topics like unnecessary expenses and family finances.

9. Become a long-term planner

Setting a resolution for 2015 may be a challenge, but aiming for something ten years away is a lot harder. Research how to become a long-term planner, so that all of your smaller goals add up to something big. Generally speaking you’ll need to know how to formulate goals that are relevant, measurable and specific.

If you can learn to put these into a larger matrix of life goals, you’ll be one step closer to the lifelong dreams that may have seemed very far away. Going on a year long cruise when you retire might seem like a dream with consequences that are very far away, but effective SMSF planning now can make it happen.

10. Analyse your decisions — with time

Everybody wonders at some point whether an expense is justifiable or not. An easy way to decide if you really want to spend money on concert tickets is to figure out how long you’d be willing to work for them.

Divide your weekly pay or annual salary to figure out how much you earn per hour (after tax and deductions). Once you know what that amount is, you can divide the cost of whatever purchase you are going to make by that number to figure out how many hours you would work to earn it. Is it still worth it?

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Learn more about 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)

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 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 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.

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 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.

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.

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 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.

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 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 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.