One of the first pieces of advice we learn about money as children is that we have to save our money in order to have enough to buy the things we want. As we get older, this advice applies to saving up a deposit for a home, to buy a car or to go on a holiday. But there’s actually more to saving up money than simply tucking away a few dollars into a hidden account each week. You can make your money work harder by doing a little research into the kinds of savings accounts that are available right now, and how you can maximise your interest earnings in a low-interest environment.
AMP financial adviser Mark O’Leary knows a thing or two about maximizing money and financial opportunities.
“With the cost of living rising it’s becoming increasingly important for Australians to know how to save smart,” says Mark. “It’s all well and good to have a savings account, but without knowing how to make the most of your cash you could be doing yourself a disservice.”
This is Marks advice on making the most of your money
Understand interest
According to mark, different savings accounts have different interest rates and options, and one of the most important things for you is to set yourself up with a high-interest savings account.
“Interest can be calculated and paid in different ways,” says mark. “It can be calculated daily, paid monthly or paid quarterly.”
“Bonus rates are a feature worth looking out for in a savings account. Many online savings accounts feature a ‘bonus rate’ of interest which is an additional rate of interest above the base rate. There are often conditions attached to getting the bonus rate, like making a minimum monthly deposit. Also, it’s important to remember that sometimes the bonus rate expires after an introductory period, so check how long it’s valid for.”
Understand the account fees
Some financial institutions charge administrative or account fees on savings accounts and these can potentially eat up any interest that’s earned on the money in the account.
“Account fees might seem minimal but they can add up in the long run and make a big difference.”
Maintain easy access
Mark says having easy access to your money can be an important feature to look for in a savings account, especially if your saving on a tight budget.
“Accounts that offer a good interest rate but can still be easily accessed via internet banking or even have a debit card linked are useful, especially if you need the cash for a rainy day.”
How can everyday Aussie’s make their savings work harder?
“While a good interest rate can provide a much needed boost to your savings, interest rates alone aren’t enough to rely on to build savings,” says mark. “A high interest rate combined with self-restraint and a realistic savings plan is a good recipe for achieving your savings goals. You don’t need to have a high income to achieve your financial goals – just a plan!”
“Having a nest egg of savings on hand can be a good way to make large scale purchases, such as a car or family holiday. This way you’ll avoid paying pesky interest rates on credit cards and personal loans. With the average interest rate on a credit card in Australia approximately 15%, this can add up to be a huge saving which can be put back into your account.”
*Any advice given is general only and has not taken into account your objectives, financial situation or needs. Because of this, before acting on any advice, you should consult a financial planner to consider how appropriate the advice is to your objectives, financial situation and needs.
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