Saving is a personal thing. You need to work out what the best saving method is for you to be a successful saver. You might decide to save lump sums like your tax refund or your annual bonus. Or you might prefer to undertake microsavings using apps like Round-up or Acorns.
Recently, due to the impacts of the Coronavirus, Australians are struggling to maintain their saving accounts. According to Nine News, “one in five Australians who have already lost their job as a result of COVID-19 would run out of savings within a week, if they weren’t receiving government assistance”. Saving has just become more important now than ever before.
Whatever savings method you use, the best savers are the ones who form habits and save regularly. Here are our tips for becoming a more successful saver.
5 Habits of a Successful Saver
1. Create a goal and make a budget
It sounds obvious but if you have a goal and a budget, you’re more likely to save. When setting a goal its important to make it something that is real and personal for you.
If you’re stressed because you’re not paying off your credit card in full each month that could be a great place to start. Or if you’re ready to start saving towards something, be specific. Whether its a holiday or just a “rainy day” account, write down the purpose, the amount and the date by which you want to achieve it.
Once you know how much you need to save, you also need to work out how you’re going to do it. That’s where making a budget and figuring out how much you can afford to save becomes so important. Check out this Budget Planning tool provided by the Australian Government.
2. Research savings accounts
We all look for the best deal on mobile plans or health insurance but when it comes to savings accounts, we usually choose a savings option from the bank we already use.
There are a number of different saving accounts you can choose from depending on your needs. Do your research and think about how you plan to use your saving account and your end goals. For instance, if you don’t want to withdraw money from your savings account, think about opting for an account that gives you bonus interest if you don’t make withdrawals. Alternatively, you could choose an account that offers a higher interest rate but won’t let you withdraw money before a fixed date. Top tip: look for an account that doesn’t have a card attached to avoid those spontaneous purchases and withdrawals – you’ll have to do your banking online.
Compare your options and find the account that works best for you and your savings strategy.
3. Set up regular payments
Direct debits are not just for bills – they’re also for savings. Setting up a direct debit from your everyday account to your savings account automates the saving process, making you more likely to do it.
Here’s a tip: Set up your direct debit to occur the day after you get paid to remove the temptation to spend as quickly as possible. After this, you can adjust your spending money to what you have left remaining. Alternatively if you’re lucky enough to be an Employment Hero User, you can opt to have some of your pay sent directly from your payroll to your savings account.
4. Track your savings
Another secret to successful savings is to track your progress. If you have a visual representation – like a graph – to show how far you’ve come and how much further you’ve got to go, it motivates you to stay on track and put in the final efforts needed to reach your savings goal.
5. Build an emergency fund
Keeping a separate emergency fund will ensure that any unexpected life changes or set-backs will not drastically affect you financially. In the case of an unexpected expense arising, having at least three to six months worth of savings will avoid any stress of debt.
The Coronavirus outbreak is a clear example of the importance of an emergency fund. “For those still in employment, it is possible to build an emergency fund now”, stated Graham Cooke, Insights manager at Finder. It is important for those who are still employed to create emergency funds if they may not have cash savings at hand.
Nothing in this article is intended to be financial, legal or investment advice and should not be construed or relied on as such. Before making any commitment of a financial nature you should seek advice from a qualified and registered financial or investment adviser. This information relied on sources believed to be reliable and accurate at the time of publication.