How to boost your savings balance by $20,000 in 2020

It’s a new year, a new decade in fact, so what better time than now to shoot for the stars by setting a serious savings goal for 2020? 

While ending the year with $20,000 in your savings account may seem like a seriously ambitious target, it’s actually a goal shared by many Australians, especially those who are looking to buy property or a new car. 

That’s according to recently released figures from UBank, which revealed that nearly 40% of Australians are aiming to save up for a house deposit (average goal of $67,000), 25% are saving up establish a rainy day fund (average goal of $31,000) and 20% are saving up for a holiday (average goal of $11,000). 

So to get you started towards that $20,000 goal, we’ve crunched the numbers and pulled together a bunch of ideas to help you save money on your existing expenses, trim unnecessary costs and make sure the cash you do save pulls its weight.     

1. Review your essential expenses 

Home loan 

Whether 2020 is the year you buy your first home or it’s time to refinance, comparing home loans is a must because it could literally save you thousands. For example, while the average variable rate currently in the Mozo database sits at 3.71% (for an owner occupier making principal and interest repayments) there are plenty of rates under 3.00%. The difference between those two rates (assuming you’ve got a $500,000 loan being paid off over 25 years) is $2,268 a year or $56,618 over the life of the loan. 

Energy

Electricity and gas bills are likely to be one of your larger expenses throughout the year, so it can certainly pay off to review your current deal. After all, with differences as high as $1,000 between different plans on the market you could potentially save yourself hundreds of dollars a year. Get started by comparing energy offers today. 

Insurance

Is it past time you reviewed your car insurance or home insurance policies? Like home loans and energy, there can be a huge disparity between policies, as a Mozo report on car insurance in 2019 found that the difference between the insurance plans across Australia was $1,047 on average! Given that range, it’s possible that you could save hundreds of dollars a year just by switching. 

While you are at it, it’s worth reevaluating your home and contents insurance and even your life insurance by comparing insurers, and don’t forget to look out for any multi-policy discounts or online discounts to help you save even more!

Personal loan

Desperately need to upgrade your wheels? If 2020’s going to be a year of car shopping, make sure you get a great deal on your car loan too. With rates ranging anywhere from 5% to over 12%, opting for a value car loan could make a huge difference. For instance, the difference between those two rates on a $25,000 car loan (over four years) is $3,900 - or roughly $1,000 a year! The same principle applies for a personal loan you might be planning to take out renovate your property or pay for an overseas trip. 

Rent 

Australia’s hardly known for it’s cheap rent, especially if you’re living in Sydney or Melbourne where you could easily be forking out $10,000 - $15,000 in rent a year. So how much could finding cheaper digs save you? If you’re able (or willing) to move back in with your family then that $10,000 could go straight into your savings account. Not an option you’d consider? Well even moving into a rental that’s $50 a week cheaper could save you $2,600 a year! 

Phone and internet 

Are you really getting value for money on your phone or internet plan? Given that it’s not uncommon for phone plans to be $60 or even $80 a month, there’s plenty or room to save if you’re happy to sacrifice a bit of data and opt for a $20 plan instead - especially if you already own your phone. That’s a saving of $500+ a year! The same applies for your NBN plan if you’re happy to drop your $100/month plan and go for a slightly smaller provider for $60-$70 month instead - a saving of $360+ per year.       

Gym membership 

Joining a gym is a classic new year’s resolution, but how about ditching your membership altogether? Given that gym memberships can cost as much as $60+ a month, it could be seriously worthwhile weighing up whether it’s value for money, especially when that comes out to $720 a year potentially saved. So instead of jumping on the elliptical machine or treadmill, how about hitting the pavement for a run or cycle instead?    

2. Ditch a vice 

Coffee

We all love coffee (well, most of us do), so while sacrificing that daily indulgence may seem like madness there is a lucrative financial benefit behind it. That $4 takeaway coffee you get every morning may not seem like a big hit to your wallet, but it seriously adds up over the year - to a whopping $1,456! 

Full power to you if you’re able to cut out your takeaway coffee costs altogether and pocket that $1,400 in savings, but even cutting down from seven to four takeaway coffees a week would save you $624 a year.

Subscriptions 

Netflix, Stan, Disney+, Amazon Prime, Spotify, Tidal, Optus Sports, Kayo - there’s a seemingly endless amount of streaming services available to cater to all sorts of interests, not to mention other subscriptions like meal delivery kits, news and even a regular Patreon you subscribe to. While you might not consider catching up on your show a vice, even cutting out just one of your subscriptions which costs you $20 a month could save you $240 a year!   

Takeaway and eating out 

The likes of Uber Eats and Menulog can make ordering takeaway a seriously tempting option on Sunday night, and prepping lunches for work every week can be a real pain. But think of the savings! Even pocketing $5 extra a day by making your own lunch for work or uni could add a tidy amount to your savings over the course of a year - $1,300 to be exact! 

3. Travel smart

Flights and accommodation 

Getting the best value deal on flights for your 2020 trip could seriously help your travel budget. And according to Skyscanner, booking early really does pay off, as they found that the best time to book international flights was 22 weeks in advance of departure date and 21 weeks for domestic flights. 

Being strategic about when you fly can really help too, as Skyscanner found that May was the best time to schedule your international trip (cost wise) while December was the worst. Given an international flight could easily cost you upwards of $1,000, shaving 5-10% off your ticket by booking early could save you $100 or more!

The same principle applies to accomodation, and with the plethora of travel comparison websites out there you can easily compare offers to make sure you’re getting the best deal on your hotel or hostel. 

Travel Insurance

While you may have compared flights and accommodation in the past, have you compared travel insurance offers? A quick search using the Mozo travel insurance calculator reveals a $100 difference between the cheapest and most expensive basic insurance policies on offer - money that could be put to better use on food or experiences! 

Travel money fees

While you’re away you may be wondering about the best way to pay. Well the good news is that there are plenty of options, from travel credit cards to prepaid travel cards. Another option you may not know you have is using your regular old Australian debit card. There are even a growing number of banks offering travel-friendly debit cards with 0% foreign exchange commission and free international ATM withdrawals. 

Given the average foreign exchange commission in the Mozo database is 2.71% and the average fee for a withdrawal using an international ATM is $3.37, you could easily save $100 or more in fees on your next overseas trip by opting for a fee-free option 

4. Wave goodbye to debt and fees

Bank account fees 

Speaking of fees, it’s not only overseas where you should be looking to say goodbye to banking fees for good. Still paying a $5 monthly fee for your bank account? What about a $2.50 fee for using an ATM? The good news is that you don’t need to be monthly account fees or ATM withdrawal fees if you don’t need to, because there are plenty of bank accounts that are now fee-free. Even if you were only withdrawing cash twice a month ($5) and paying a $5 monthly fee, switching to a bank that doesn’t charge you for either could save you $120 a year. 

Credit card debt

Carrying a credit card balance into the new decade? It’s not unusual, especially after the busy Christmas and New Year spending period. One popular option is making use of a balance transfer credit card offer which allows you to pay off your debt interest-free over a period (generally 12 - 24 months) of time. For example, switching over to a balance transfer credit card with a low annual fee could save you $200 or more a year in interest and fees on a $2,000 balance. 

5. Boost your savings stash

Choose a competitive rate 

While reducing unnecessary expenses is one side of a savings strategy, the other is making sure the money you do save is earning a competitive interest rate - whether that’s with a savings account or term deposit. 

Unfortunately savings account interest rates have been on the decline, with the average savings account rate in the Mozo database sitting at just 0.98%, but that does mean there’s plenty of opportunity to grab a better rate if you’re not on one already. For example, the UBank USaver with Ultra Transaction Account has a rate of 2.10% if you meet the account conditions. According to the Mozo savings calculator, that’s a difference of $150 in interest assuming a starting balance of $10,000 and $800 in monthly contributions over a year. 

The same goes for term deposits. If you’ve already got a chunk of cash saved, say $30,000 towards a home deposit, and want to put it somewhere safe for a short period then a term deposit could do the trick. Currently the average 1 year term deposit rate in the Mozo database is 1.45%, but if you went with the one of the highest rates in the database, like the Judo Bank  Term Deposit which is at 2.00%, you’d earn $165 more in interest over 12 months.  

Make saving a habit  

Whether it’s transferring 20% of your salary into your savings account as soon you get paid every fortnight or month or making use of useful features like savings account round up tools, one of the most effective ways to save is by making it a habit! 

Wait, what’s a round up tool you ask? A number of savings accounts, including the ING Savings Maximiser and the Up Saver Account allow you to switch on a feature which automatically rounds up every purchase you make to the nearest $1 or $5. For example, if you put your daily coffee ($4.50) on your card the purchase would be rounded up to $5 and 50c would be deposited into your savings account. And if you did that every day you’d have an extra $132.50 in your savings account after a year!          

RELATED: How to grow your cash stash and smash your 2020 savings goals

Ready to find a savings account with a competitive interest rate to bump up your 2020 savings even more? Check out some of the hot offers in the table below, or head over to the Mozo savings account hub for even more deals.