Are you saving for your dream home or building a nest egg? Staying on top of your personal finances and ensuring you can get your money working for you, including moving money into a dedicated savings account, need not be a chore. Taking advantage of automated saving programs means you won’t need to rely on personal discipline to remember to transfer funds into your savings account on a regular basis. In other words, your money will do your work for you.
What are the benefits of automating your savings?:
- If you’re serious about saving, setting up a regular automatic transfer from your salary or another account into a dedicated savings account means you have taken the time to prioritise your savings and can allow your savings to grow automatically, without a second thought.
It is easy and convenient – once you have taken the few simple minutes needed to set up your automated transfer, your savings account will take care of itself. Just set, forget and watch your balance grow. This is ideal for someone who wants to steadily build up their savings without having to manually deposit funds every few weeks.
- Give the account a name – to help you reach your goals and add an element of self-motivation, name your account. ‘Dream Holiday’, ‘Shiny new car’ or ‘My own home’. This will remind you of the account’s purpose and can reduce the temptation to dip into it.
- It can take temptation out of your hands – automatically transferring funds into a dedicated savings account can reduce the temptation to spend the funds before they’re needed. However, remember, it still takes discipline not to touch it!
- It can help you achieve your long-term saving goals – with an automatic savings plan you can reach your savings goal without lifting a finger. Sit back and let your savings grow.
How to set up your automated savings:
The first step when looking to automate your savings is working out how much you can afford to move into a separate savings account. Use the MoneySmart budget calculator to add up your income, debt and expenses. Now that you know the portion of income leftover, you can decide how much you’d like to dedicate to savings and how much you’d like to keep as disposable income.
Open a separate savings account to your everyday transaction account. Operating a separate savings account can remove the temptation to access or spend the funds on a whim.
How to automate your savings:
Ask your employer to pay either a set amount or a percentage of your wage into your savings account, with the balance paid to your everyday transaction account.
You could also schedule a recurring direct debit. Once your wages go into your everyday transaction account, you can have the direct debit transfer a specified amount into your dedicated savings account. Set the direct debit to occur a day or so after your payment date to reduce the potential (and charges) for having ‘insufficient funds’ in your transaction account.
Additional tips to boost your savings:
- Look for interest. We all want to earn higher interest returns, so make sure you do some research and look for a savings account that meets your needs and pays you interest. There is no better way to boost your savings than allowing it to grow without doing anything, thanks to interest.
- Save all or part of your tax refund (if you receive one). Instead of splurging, consider transferring it to your savings account or use it to retire down any debts.
- Look for savings in your budget to boost your savings account. If you have the opportunity to make savings in your regular budgeting, you could use any funds saved to boost your separate account.
- Sell unwanted items online or have a garage sale. You can then place the proceeds into your savings account.
- Regularly review the amount you direct debit and adjust it accordingly. If your financial situation changes, your disposable income increases due to debt retirement or if you receive a pay rise, etc, any bonus income could be added to the direct debit amount.
- Unexpected windfall? If you are fortunate to receive a windfall, you could also use it to boost your savings.
LLL Savings Accounts have no fees or charges and pay a variable interest rate, making them ideal secondary accounts. Find out more.
The LLL prides itself on providing savings accounts that are simple to operate, with a variable interest rate and no fees or charges. The LLL has a variety of savings accounts: personal and joint accounts; guardian accounts for children; and business accounts, including for self-managed super funds and not-for-profit organisations.
As an Authorised Deposit-taking Institution (ADI), the LLL is regulated under the Banking Act and by APRA.
This advice is general in nature and does not take into account your personal situation, needs or objectives. Please consider the Disclosure Documents to decide if this product is right for you.