Guest post by Helen Baker, financial advisor and spokesperson for Money.com.au.
With the current uncertainty in the wake of shutdowns and Government restrictions, many Aussies may be wondering how they can bolster their savings while they still have regular pay coming through, in case their income drops. When times get tough, it can be reassuring to know you’ve got a stable saving mechanism in place to help keep you afloat.
Here are my 6 best-kept tips for bolstering your savings to help prepare for a potential fall in income:
- Start new habits by cutting back on non-essentials. People often struggle to reduce their expenses on eating out, entertainment and other frivolous expenditure, but with the nation currently in lockdown, it might be easier to start good habits now. Even if you already have a tight budget, don’t be deterred by the thought of putting away money each week. It’s about being consistent with saving what you can spare, forming good habits and chipping away little by little than stowing away large sums if it isn’t sustainable.
- Consider opening a high-interest savings account. A high-interest savings account (HISA) is a bank account designed for saving instead of spending, and also has bonus interest applied if you meet specific savings criteria. It’s a simple way to maximise interest earnt on your savings, even if you only trickle in a little bit at a time. An example of a HISA in the market offering strong rates is the HSBC Serious Saver Account, which has a four-month introductory rate of 1.85 per cent and a 0.01 per cent ongoing variable rate that is applicable every month you don’t make a withdrawal.[1] Free tools such as the Money.com.au Compound Interest Calculator can help you estimate how much you’ll receive in interest to help push you toward your goals.
- Ensure your savings account isn’t easily accessible. It’s a good idea to have three bank accounts: one for everyday expenses, one for savings, and another for bills. Bills are generally consistent withdrawals so it’s good practice to have a direct debit set up form a separate account so you can keep money aside to pay regular expenses. As for the savings account – it should be one that isn’t easily accessible through tools such as phone banking to reduces the opportunity for you to transfer money out and use on impulse purchases. The harder it is to check the balance in your savings account, the better it is as you won’t be as tempted to spend money if you’re unsure of the amount you have there.
- Set up automatic deposits into a savings account. If you’re someone who struggles with setting money aside, consider setting up an automatic transfer into a savings account on the same day you get paid. An out-of-sight-out-of-mind approach of saving can help curb the temptation to overspend. To work out how much to put aside, work out your fixed bills and then use a budgeting tool such as theMoney.com.au budget spreadsheet to assess different outcomes when reducing the ‘wants’ in your spending.
- Round up on your daily spending. Another strategy that can work wonders is setting up a transaction account that automatically rounds up every purchase you make and puts it straight into your savings account. Some banks offer this feature, such as ING’s Orange Everyday Account. You can set whether you’d like it to round up to the nearest dollar or even to the nearest five dollars, depending on how much you can spare. This way, your spare change is going to good use without you even noticing much of a difference since it’s incorporated into your everyday spending.
- Save on your grocery bill by growing fresh produce. While we are all being advised to stay home under new social distancing restrictions, a great way to save money and reduce your grocery list is to start a small herb garden. It’s easy to spend $10 a week on herbs such as dill, basil, mint and parsley, but these unnecessary costs as you can easily grow them in your own home. Having these on hand allows you to add flavour to any dish you’re whipping up, and you could save up to $520 a year if these are part of your regular grocery shop.
- Take advantage of free financial services and information sites. There are plenty of financial tools and websites available online, which can help you learn more about managing your finances, help you change your spending habits and find ways to help you save. One such platform that can help with your budgeting and savings needs is Money.com.au. It even offers a free budget planning spreadsheet that helps you approach your savings and spending by reviewing your finances.
About Helen Baker
Helen Baker is a financial adviser, author, speaker and spokesperson for online finance information platform Money.com.au. Helen has a passion for empowering Aussies to find financial freedom through strategic planning and goals-based financial advice. She has worked as a qualified financial adviser since 2009 and was a finalist in both the Financial Planner/Advisor of the Year and Women’s Community Program of the Year categories in 2017 as well. For more information, visit Money.com.au.
