It’s time to give yourself a $10,000 raise

It’s time to give yourself a $10,000 raise

Whatever your employment situation, we could all benefit from earning more and spending less.

On the surface, Australia’s jobs picture looks pretty good, with the unemployment and underemployment rate falling over the past year.

But not everyone has a job. And even if you do, there’s no guarantee your company won’t suddenly make your position redundant.

With that in mind, here are five ways you can increase your income and reduce your expenses, so that whatever the future holds, you’re in a stronger financial position.

More people in work

Australia’s unemployment rate fell from 5.6% to 4.9% between February 2018 and February 2019, according to new data from the Australian Bureau of Statistics. The underemployment rate also fell, from 8.5% to 8.1%.

5 ways to make more money

Selling unnecessary possessions is a great way to make quick money. We all have way too much stuff in our homes – clothes we no longer wear, exercise equipment we no longer use, white goods we no longer need. Cash in by selling it on eBay or holding a garage sale.

Embracing the sharing economy is another way to cash in on unused possessions. If you’ve got a spare room (Airbnb), parking space (Parkhound), storage space (Spacer), vehicle (Car Next Door), bike (Spinlister) or designer dress (The Volte), you’ve got a potential income source.

Freelancing over the internet is a convenient way to earn money from home, whether as a side hustle or a main job. Platforms like Freelancer, Fiverr and Upwork can connect you with clients who need services like writing, design and web development.

Doing odd jobs is another way to boost your bank balance. If you register with Airtasker, you’ll find a horde of people who want to outsource chores like mowing their lawn, cleaning their pool, painting their walls, washing their car and moving their possessions.

Tutoring local students can help you turn your knowledge into money. A lot of parents are happy to pay good money so their children nail their Year 12 and university exams. If you’re good at something, and a local student is studying it, it could be a match made in heaven.

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5 ways to save more money

Cancelling your gym membership could save you $1,020 per year if you’re on an $85-per-month plan. But that doesn’t mean you need to quit exercising – running, walking, push-ups, sit-ups, planking and a range of other exercises don’t cost a cent.

Cooking your own meals could save you $2,020 per year. Instead of buying lunch at work for $20, make it at home for $5. Instead of having one $50 restaurant dinner per week, have one every fortnight.

Switching credit cards could save you $128 per year, which is the average annual fee of all the credit cards listed on the RateCity database. Instead, you could take out one of the 30-plus credit cards in Australia that don’t charge an annual fee.

Using the library could save you $360 per year. Why spend $30 per month on books and magazines when you can get your reading fix for free?

Quitting smoking could save you $7,800 per year if you’re dropping $30 per pack and going through five packs per week.

Take control of your finances

How does a $10,000 raise sound?

Well, it can be all yours if you can raise your income by $5,000 per year and reduce your expenses by the same amount.

No one knows what the future will hold – unemployment might rise, your company might go bust, your role might get eliminated.

If that happens, you’ll be glad to have another $10,000 in your pocket. And if it doesn’t, you’ll still be glad to have that extra money.

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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)

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

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 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

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.

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 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 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.

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.