Top saving tips from successful savers

Top saving tips from successful savers

Saving money is necessary, but that doesn’t mean it’s always going to be easy. If you want to enjoy the odd holiday, upgrade your car or have a comfortable retirement, you’d better make sure your savings account is clearly in the black!

New research from the Australian Securities and Investments Commission (ASIC) shows successful savers employ particular techniques to help reach their savings goals.

“Savers who regularly review, remind themselves and publicly commit to their savings goals are those more likely to achieve them,” said the ASIC’s Miles Larbey.

So just what can you learn from the best savers?

Tip 1: Understand

First things first — you’ll need to know exactly what you’re saving for and how much money you’ll need.

According to the ASIC’s online poll, 78 percent of those who feel confident about meeting savings targets understand how much money they need.

Whether you’re saving for Christmas presents or a deposit for a home loan, it’s smart to understand just how much you need, whether the amount is big or small. 

Tip 2: Plan

Once you’ve set a figure (whether for one savings goal or many), you need to implement a plan.

With three-quarters of confident savers putting a clear savings plan in place, it’s easy to see why this might be a smart idea.

If you’re a visual person, consider drawing a representation of what you’re saving for — whether it’s a car or house — on a piece of card. Divide the image into sections and shade off each section as you reach a designated savings goal, whether it’s $100 or $1000. Be sure to stick this in a prominent place!

Perhaps you’re a numbers person. If so, creating a spreadsheet of your incoming and outgoing costs is a smart idea. You can then work out how much you can save, how often.

Tip 3: Review

Close to three in four (73 percent) confident savers “regularly review progress towards their goal”, according to the ASIC.

Even if you set up an automatic payment to put money into a designated savings account, make sure you consistently check up on how your savings habit is tracking.

Tip 4: Time

Are you saving for a special overseas trip or a wedding? It can be easy to push out dates if your savings aren’t quite cutting the mustard.

According to the ASIC, 72 percent of confident savers set a specific saving timeframe.

Make sure you do the same — you may find the deadline is incredibly motivating!

Tip 5: Share

Finally, be sure to share your goals with family and friends — a habit of 43 percent of confident savers.

This doesn’t mean you have to broadcast your bank account details to your Facebook friends, but telling your close relatives or good friend that you’ve got your eye set on homeownership, a round-the-world trip or new vehicle can help you stay up to date with your saving.

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Learn more about 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.

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 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 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 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 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.

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 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 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.

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 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 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.

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.