Why 2015 is the year to refresh your budget

Why 2015 is the year to refresh your budget

Budgets are boring, right? You assign income to expenses, divert money into a savings account and if all works out well, you don’t rely on your credit card too much. But is that all there is to budgeting for a year? Not by a long shot! Here are some things to budget for in 2015 that you could get excited about.


What — a holiday in the budget? Yes, of course! Just because it seems like an extravagant luxury item, doesn’t mean it shouldn’t be a part of your everyday planning. If you account for big expenses like this, they are less likely to be a financial burden further down the track. Rather than financing a holiday with debt, you could squirrel away some funds into a savings account and really enjoy it when it comes around.

If a big splash isn’t on the cards this year, how about a ‘staycation’? That’s right, a vacation staying at home. If you budget to take some annual leave or even unpaid leave to spend a few days with your spouse or family in the middle of the year, you can seriously recharge your batteries, leaving you with more energy at the end of 2015. 

Being free

The thought of being free doesn’t feature much on most people’s budgets. Usually it’s just scraping to get by. So how can you budget to be without worries and frustrations? Budget to kill debt. While saving money is always great, paying down loans first means you’ll lose less in interest and ultimately spend less time paying them off.

If you’re able to structure your budget around becoming debt-free within a certain timeframe, you’re basically working your way to freedom. Sounds a lot sweeter than a savings plan doesn’t it? It’s all about choosing an end for your means. A savings plan is a brilliant tool if it helps you to do brilliant things.

The unexpected

What could be more exciting than the unexpected? Your sister has a baby, your work sends you on an overseas secondment, your fiance pops the question or you find a puppy to take home. All of these exciting things cost money in some way or another.

While you may not be able to pinpoint where some of these savings might go, having a rainy day fund is about more than emergency mechanic’s bills — although it certainly helps in those scenarios. Paying attention to this aspect of budgeting means that you are able to keep debt down in emergencies or unexpected events. This means it will be easier to budget for the second point in this article, which in turn makes it even easier to save for the first.

While the world of personal finance can seem very small and very insular, it is actually not as lonely as its name suggests. There are many people who need to go on your budgeting journey with you. For one, there will be some supporters, like mom and dad, who help you keep your head in the game so you can reach your goals.

Then there are your team mates. These could be your own family, spouse, business partners, financial advisers or even flat mates — the people whose actions will make a difference to your everyday choices. When you share your goals and aspirations with these people you not only have encouragement, but also a partner or team that will help you cross the finish line — because they have a vested interest in your success.

Sharing your struggles as well as your triumphs, whether it’s paying down your car loan or spending too much on your credit card, will help you to seriously wrangle your budget under control.

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Learn more about 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.

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 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 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 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)

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 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.

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 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

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 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