Five ways to fast-track your savings in a low interest rate world
First published on July 31, 2019
Record low savings rates, stagnant wage growth, and the rising cost of living are putting the squeeze on Australia’s savings balances. Recent research from MyState Bank shows almost one third of Australians said they save less than two years ago or have never managed to save any month. Further, nearly one in 10 Australians said they struggle to reach the end of the month financially.
Despite the unfavourable savings environment, with a couple of changes here and there, building up a healthy savings pot can be easy as A-B-C.
1. Set up a HIGH INTEREST SAVINGS account
An account paying a decent rate on your hard-earned savings is harder to come by these days, but not impossible to find if you know where to look. Stashing your cash away in an account with market leading rates is certainly a good start towards reaching your savings goals like the MyState Bank Bonus Saver, where you can earn bonus interest you meet the minimum requirements.
2. Get BUDGETING
Having a workable budget in place is key component of any healthy savings plan. However, many of us fail to get the basics right. The same research by MyState Bank uncovered more than a quarter of Australians (27%) don’t have a budget in place to track their expenses. Regardless of whether you create your own spreadsheet or use an existing template like our Planner, a budget is a good starting point to assess your income and recurring expenses to determine if there is any opportunity to for savings wiggle room.
3. Create a ‘BUDDY’ system
Do you ever feel more motivated to go to the gym if you are with a friend? The good news is you could use the same mentality with your savings regime. This strategy, called the “financial buddy system”, is like having a workout partner to help you overcome a lack of motivation and conquer your fitness goals. You can start by having a frank conversation with a close and trusted friend who will motivate you and keep you on track while you work towards hitting your financial benchmark – and, of course, you do the same for them.
4. CHANGE just one habit
Building up a healthy savings pot doesn’t necessarily mean overhauling your entire lifestyle. In fact, it could be the very opposite and start with one thing. For example, if you have a penchant for takeaway coffees or lunches during the work week, try bringing in your lunch or using the coffee machine in the office. A small change to one thing you do regularly could make a big difference to your bank balance.
5. Bring impulse purchases under CONTROL
There is nothing wrong with dabbling in the occasional small impulse purchase every now and then. However, if this is becoming a habit, it could be a huge drain on your savings. In a recent MyState Bank survey, six in 10 Australians said their mood had a negative impact on their savings. New functionalities like Buy Now, Pay Later services and Tap & Go have made impulse purchases easier.
To conquer impulse purchases, try waiting at least a day before you buy it – 30 days if it’s an unnecessary big purchase. The urge may pass resulting in some savings for you. Another way of curbing your impulse to buy is to work out how many hours of work the purchase price represents. Chances are you may think the item is not worth it. Don’t forget to delete pre-saved details from online shopping sites which often make it easier for impulse purchases on those ‘bad’ or boring days.
Disclaimer: The savings tips are of a general nature only and do not take into account your particular circumstances.