Before you start stashing away money every week, make sure you can actually afford it. A well-planned budget will get you started on your savings path. Check out Budgeting 101 and Budgeting 102 for handy tips. If you’re ready to start saving though, read on.
Earn your bonus interest
Savings habits are kind of like being in school. Good savings habits reward you and send you on an awesome field trip: bad behaviour sends you to the principal’s office and detention.
To take advantage of any bonus interest available with your account, you have to show discipline and good savings behaviour.
How it works
With accounts like NAB Reward Saver, you get bonus interest each month if you make no withdrawals and at least one deposit each month. Then, if you follow those simple rules, you’ll receive your regular interest plus your bonus interest at the end of the month.
Let’s say in month one you’ve saved $4,000 and your interest rate is 2.50% per annum. Then that month you’ll earn approximately $8 in interest. Your bonus interest varies from different accounts—some need a minimum monthly deposit, some no withdrawals, and some are clause-free (check the account details before you open the account). For this example, we’ll assume there are no clauses and your bonus interest is 0.90% per annum. So for month one your bonus interest will be $3.
Every month, you’ll see your interest and bonus interest (if you stick to the conditions) increase along with your savings. Think of your interest as free money. Eleven dollars might not sound like much, but at the end of 12 months you may have earned an extra $130.
Set up a regular payment
If you get your phone or power bill direct debited from your account, then you're going to apply the same concept to your savings account. Each pay day you're going to make a regular automatic payment into your savings account.
It’s best to make your payment early in the month, because transfers could take a few days to reach your account. You don’t want to risk losing your bonus interest.
Hiding your accounts
Once you’ve set your savings goal in place (car, holiday, house deposit), it’s wise to keep that money hidden. When we say hidden we don’t mean stash it in a hole in your backyard. We mean remove it from view in internet banking.
This is so you’re not tempted to withdraw all your savings during a stocktake sale. If you’re easily drawn into bright department stores, it’s probably best to avoid the shops altogether. We teach you the ins and outs in Hiding accounts to help you save.
You shop around for the cheapest car insurance or mobile phone package and the same should be done with your savings accounts. If an online savings account doesn’t work for you, then maybe a high interest term deposit will.