Women lose sleep over money worries

Women lose sleep over money worries

Australian women tend to experience higher stress levels than men, and money is often a leading cause of anxiety, a new study has revealed.

The study by Lifeline found 71 percent of respondents suffer from stress caused by finances, and over 70 percent of women are occasionally losing sleep due to stress, with one in five losing sleep on a regular basis.

The issue is, when it comes to money, many women take it very seriously.  A recent survey from ME Bank found 21 percent of women follow a budget or a savings plan compared to 16 percent of men.

However it’s in the area of long-term wealth creation that women tend to fall behind. The same research found 25 percent of men are building wealth for retirement compared to just 19 percent of women.

Part of the problem is highlighted by research from RMIT, which shows financial decisions made by women are often based on family rather than personal needs.

RMIT’s Professor Roslyn Russell explains that for women, “The major motivation for seeking financial education or information was to provide a more comfortable, easier life for their families or children.”

This altruism is leaving many women short-changed especially in retirement. As a guide, the median superannuation balance for women is around 45 percent that of men, according to a recent Roy Morgan survey.

Elaine Henry, member of the Australian Government Financial Literacy Board, says, “Women face particular challenges in planning for their future and need to take the reins of their finances as early as possible.”

Among these challenges are greater life expectancy, meaning the prospect of a longer retirement, coupled with lower earnings and time taken out of the workforce to raise children. Taken together it means women face hurdles for building long term wealth. But it can be done.

As a starting point, Henry believes women need to “extend their focus from day to day money management to planning for the future”, and that means becoming more active in financial decision-making beyond managing the household budget.

Henry says, “A great place to start is to do a money health check. This will show you which areas of your finances need attention.”

Start by comparing rates paid on savings accounts as well as your credit cards, home loans and other financial products using a free comparison site like RateCity, says CEO Alex Parsons.  

“Shopping around between financial products is a key starting point for a financial health check,” he said.

“In particular, women can harness their savings skills by comparing returns across different savings interest to ensure they are earning the highest available returns. From here it’s a matter of determining how to use a lump sum to strengthen their financial future – something that will go a long way to reducing personal stress levels.”

 

 

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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.

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 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

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 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.

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.

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.

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.

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. 

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.

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.