We all have different reasons for wanting to build savings, and the reasons can change. You might want to build a deposit for a house, or car, or holiday, or other important life events. You might just want to ensure you have financial security over the long term.
Whatever your purpose, setting yourself up for saving can feel like a hard task. But it doesn’t have to be. Even putting a tiny amount aside every week into a savings account can make an enormous difference to your future.
Whether you’ve got a sum to start with or are starting from zero, here are five steps to setting yourself up for success.
1. Understand your spending to see what you can save
- To understand your current financial situation, make a list of all your essential costs e.g. rent or mortgage, utilities, regular bills, food and fees.
- Regularly review and compare your internet and utilities plans and subscriptions to see if there is a better deal for you.
- Use a spreadsheet or budgeting app to track how much you are spending. Our online budget planner is the perfect place to get started.
2. Make sure your budget answers the real questions
- Are you aware of what you earn on a fortnightly, monthly, and annual basis?
- Do you know how much you spend and what you are spending your money on?
- Do you know how much you owe?
Ensuring your budget answers these questions will help you feel confident it’s covering your whole financial situation. Then, you can set aside an amount to save being confident it won’t eat into your day-to-day needs.
3. Work on reducing your debts
You might have credit cards, a mortgage, or loan debts to consider when you’re planning savings. If you can consolidate all your debts into one it will make it simpler to keep track, with only one repayment due per month. If you’re unable to consolidate your debts, you can make a plan to pay them off in a manageable way.
Approaching debt in a systematic way means you will gain control over where your money is going – a crucial step towards managing how you save.
4. Look for ways to start saving that fit with your lifestyle and financial goals
You’ll find saving easier to manage and sustain if it fits with your lifestyle and goals. One simple way to start planning savings is to divide your income into different purposes – your expenses, things you want, and savings.
- 70% of your income will go on expenses,
- 20% of your income will go on wants,
- 10% of your income will go into savings.
If the percentage split seems unattainable because of your current expenses, set a smaller amount. It can be as little as $5 – just make sure it is achievable for you. Consistently saving will add up over time and you’re more likely to keep it up if it doesn’t make life more difficult.
Once you’ve decided the right percentage split for you, you may want to consider setting up your pay to be automatically transferred into a separate account for each of those areas. That way, your income for expenses and wants is always separate from your savings.
5. Get the best interest rate you can
Savings accounts that give rewards for deposits are great choices, as your money is secure, and you’re rewarded for consistently adding to your savings balance.
The best way to keep a rewards savings account working for you is to set it up so that you have a direct deposit, like your salary, going into it automatically, either weekly, fortnightly, or monthly. You can change the amount as your situation changes, and you can still access these funds whenever you need. So long as you’re depositing something each period and your end of month balance is greater than the start of the month balance, you'll get the highest interest, and your money will grow.
Looking to give your savings a boost? A high interest savings account helps to save for the future. Learn more about our Reward Saver account.