Most Aussies plan to save their tax return. Here’s what to do with yours

As a grim economic outlook looms with nearly 1 in 10 Australians forecasted to be unemployed by December, it’s no surprise many are tightening their purse strings. The latest figures show most Aussies won’t be spending their 2020 tax return.
ME Bank research released this week found that 58% of Aussies plan to add their tax return to savings, compared to 49% last year.
There’s also been a switch in gears to more mindful spending. ME reveals a growing number of Aussies are looking to boost their financial position with their tax return, rather than splurge it on discretionary items.
For instance, 21% intend to use the money on home loan repayments (up from 17% a year ago), while 18% want to invest it in shares or their super (up from 16%).
But a small segment (22%) still plan to use their tax return on non-essentials like eating out, entertainment and travel - 1% lower than last year.
These findings were based on surveys with 1,000 Australians in June 2020.
The report comes as ANZ-Roy Morgan numbers released today indicate consumer confidence has dropped back down to 90.2 points (or 24.2 pts less than a year ago), following new COVID-19 outbreaks in NSW and Queensland.
ME’s general manager of personal banking, Claudio Mazzarella said the current climate is propelling this shift from spending to saving.
“The pandemic is clearly changing the financial habits of the nation. This survey illustrates how wary Australians are feeling in this economic climate,” he said.
Aussie spending during COVID-19
Mozo data also shows our money habits have come a long way since the start of COVID-19 restrictions, when Zoom meetings and couch commutes were still a novelty.
Back then, 38% of Australians admitted to spending more while being cooped up at home.
The survey with 1,107 Buy Now Pay Later users conducted by Mozo in April found that while some opened their wallets wider to support local businesses impacted by the pandemic, others online shopped to stave off boredom. That included pouring hundreds of dollars into gym gear, console games and alcohol.
A whopping 40% of respondents were also purchasing up to $100 worth of clothes and shoes. Meanwhile, 22% spent $50 a week on takeaway, while 22% paid between $20 to $40 for streaming services.
But flash forward to June and another Mozo survey revealed Aussies had begun reining in on their spending.
In fact, 61% said they were now saving more while working from home, with people waving goodbye to domestic travel, gym memberships and eating out.
What to do with your tax return
So, is saving the way to go with your tax return? The short answer is yes, but there are a few tips to keep in mind before stashing the cash away.
1. Don’t forget about debt
Prior to pouring your entire tax return into savings, it could be worth dedicating a portion to paying down your personal loan, credit card or home loan.
“Paying down debt is a great strategy as it reduces an ongoing cost, freeing up your monthly budget,” says Mazzarella.
Need help deciding which debts to prioritise? There are two common methods, and the right one depends on your situation and preferences:
- Start with the highest interest first: Higher rate debt also piles up faster. So by ridding the biggest killers first (usually credit cards), you can dodge this snowballing effect.
Start with the lowest balance first: Clearing debt can be overwhelming, which is why small wins can help you stay on track. This method means you’ll hit debt repayment milestones quicker, keeping you motivated.
2. Futureproof yourself
If COVID-19 has taught us anything, it’s the importance of having a crisis cash back-up. An emergency savings fund is a separate bundle of money you keep in your hip pocket just in case.
Previous Mozo research has shown only 25% of Aussies have enough savings to stay afloat in unforeseen circumstances, so your tax return could be a great opportunity to bulk up that emergency fund.
“Ideally, you’d have emergency savings to cover at least six months of expenses, but even having a small stash of cash can help weather life’s unexpected events or outlays,” Mazzarella says.
3. Build up your nest egg
If you’ve got your rainy day fund covered, then your next port of call might be building some meat into your retirement savings. Besides salary sacrificing, you can also add to your super by making personal contributions, such as your tax refund.
Where to stash your savings
Whether you’re growing your emergency fund or working towards a long-term savings goal, a good place to park your money would be inside a high interest savings account.
Many of these accounts come with monthly conditions (like a minimum deposit or number of card transactions), but as long as you can realistically meet their requirements, you could be looking at rates as high as 3.00% with Westpac Life (18-29 years old) and 1.75% with HSBC Serious Saver.
Scroll down below for a list of other high interest options, or jump on over to our savings account comparison table for more deals.
Compare high interest savings accounts - last updated 13 August 2022
-
Save Account
Maximum rate
standard interest rate
Govt Deposit Guarantee
2.35% p.a. (for $0 to $250,000)0.10% p.a.(for $0 and over)Yes up to $250,000Deposit at least $200 to either Spend or Save account from an external source each month.
Earn up to 1.85% p.a in interest. No monthly fee to pay. Split your money in up to 10 Save accounts. Track your progress on each of your save accounts. Instant access to cash via PayID and Osko. Deposits guaranteed up to $250k per customer.
CompareCompareSave Account
Earn up to 1.85% p.a in interest. No monthly fee to pay. Split your money in up to 10 Save accounts. Track your progress on each of your save accounts. Instant access to cash via PayID and Osko. Deposits guaranteed up to $250k per customer.
- Maximum rate
- 2.35% p.a. (for $0 to $250,000)
- standard interest rate
- 0.10% p.a.(for $0 and over)
- Govt Deposit Guarantee
- Yes up to $250,000
- account fee per month
- $0.00
- Maximum rate conditions
- Deposit at least $200 to either Spend or Save account from an external source each month.
- Access
- Internet banking
- Minimum balance
- $0.00
- Other restrictions
- Bank and saving account only accessible through iOS or Android app.
Read our Mozo Review to learn more about the Save Account
-
Mozo experts choice awards won:
- Best New Savings Account - 2022
Boost Saver with Go Account
Maximum rate
standard interest rate
Govt Deposit Guarantee
2.30% p.a. (for $0 to $250,000)0.05% p.a.(for $0 and over)Yes up to $250,000Bonus rate of 2.30% is made up of the Base rate of 0.05% and Bonus rate of 2.25%. Deposit $2,000 each month and make 5 eligible payments from your Go Account. If you are between 18 and 25 deposit $1,000.
Enjoy a high interest savings account bundled with an everyday spending account. No monthly fees. And new customers can get a welcome bonus of 5,000 bonus Virgin Money Points (ends 31/08/22. Offer criteria & T&Cs apply).
CompareCompareBoost Saver with Go Account
Enjoy a high interest savings account bundled with an everyday spending account. No monthly fees. And new customers can get a welcome bonus of 5,000 bonus Virgin Money Points (ends 31/08/22. Offer criteria & T&Cs apply).
- Maximum rate
- 2.30% p.a. (for $0 to $250,000)
- standard interest rate
- 0.05% p.a.(for $0 and over)
- Govt Deposit Guarantee
- Yes up to $250,000
- account fee per month
- $0.00
- Maximum rate conditions
- Bonus interest 2.30% is made up of the Base rate of 0.05% and Bonus rate of 2.25%. It only applies when you deposit $2,000 into your Go Account and make 5 debit card purchases, direct debit or BPAY payments in the previous month. If you are between 18 and 25 you need to deposit $1,000 and fulfil the other criteria.
- Access
- BPay, Internet banking
- Minimum balance
- $0.00
- Other restrictions
- Bank and savings account only accessible through iOS or Android app.
Read our Mozo Review to learn more about the Boost Saver with Go Account
-
Mozo experts choice awards won:
- Young Adult Savings - 2022
Life - 18-29 years old
Maximum rate
standard interest rate
Govt Deposit Guarantee
2.75% p.a. (for $0 to $30,000)0.65% p.a.(for $0 and over)Yes up to $250,000Make 5 card purchases/month with a Westpac Choice account and min 1 deposit and higher balance than at the beginning of the month in Life savings account.
Are you 18 - 29 years of age? Earn up to a generous 2.75% p.a. variable interest on your savings when you spend and save with Westpac. For individuals aged 18 to 29 on Westpac Life account balances up to $30k.
CompareCompareLife - 18-29 years old
Are you 18 - 29 years of age? Earn up to a generous 2.75% p.a. variable interest on your savings when you spend and save with Westpac. For individuals aged 18 to 29 on Westpac Life account balances up to $30k.
- Maximum rate
- 2.75% p.a. (for $0 to $30,000)
- standard interest rate
- 0.65% p.a.(for $0 and over)
- Govt Deposit Guarantee
- Yes up to $250,000
- account fee per month
- $0.00
- Maximum rate conditions
- Make 5 card purchases/month with a Westpac Choice account and min 1 deposit and higher balance than at the beginning of the month in Life savings account.
- Access
- BPay, Branch access, Phone banking, Internet banking
- Minimum balance
- $0.00
- Other restrictions
- Must hold a Westpac Choice transaction account. If 5 card purchases are made each month, but savings account balance hasnt increased, a 2.05% interest rate still applies.
Read our Mozo Review to learn more about the Life - 18-29 years old
-
Mozo experts choice awards won:
- Regular Saver - 2022
Bonus Saver Account
Maximum rate
standard interest rate
Govt Deposit Guarantee
2.10% p.a. (for $0 to $250,000)0.05% p.a.(for $0 and over)Yes up to $250,000Bonus rate when at least $20 is deposited each month and five Visa Debit transactions are made each month using linked Glide transaction account.
Winner of a Mozo Experts Choice Award 2022 in the Regular Saver category. No monthly account fees. Available only on balances up to $250,000.
CompareCompareBonus Saver Account
Winner of a Mozo Experts Choice Award 2022 in the Regular Saver category. No monthly account fees. Available only on balances up to $250,000.
- Maximum rate
- 2.10% p.a. (for $0 to $250,000)
- standard interest rate
- 0.05% p.a.(for $0 and over)
- Govt Deposit Guarantee
- Yes up to $250,000
- account fee per month
- $0.00
- Maximum rate conditions
- Bonus rate when at least $20 is deposited each month and five Visa Debit transactions are made each month using linked Glide transaction account.
- Access
- Phone banking, Internet banking
- Minimum balance
- $0.00
- Other restrictions
- Must link to a transaction account
Read our Mozo Review to learn more about the Bonus Saver Account
-
Grow Saver
Maximum rate
standard interest rate
Govt Deposit Guarantee
1.80% p.a. (for $0 and over)0.05% p.a.(for $0 and over)Yes up to $250,000Make at least 1 deposit per month and no more than 1 withdrawal, including internal transfers or external payments. Must enable the Lock Saver feature. 32 days notice for withdrawal and T&C's apply.
Pay no monthly fees. Set-up to 9 personalised savings accounts and choose to lock as many accounts as you like to earn the maximum variable interest rate. With just 32 days notice to access your money again, your future self will thank you.
CompareCompareGrow Saver
Pay no monthly fees. Set-up to 9 personalised savings accounts and choose to lock as many accounts as you like to earn the maximum variable interest rate. With just 32 days notice to access your money again, your future self will thank you.
- Maximum rate
- 1.80% p.a. (for $0 and over)
- standard interest rate
- 0.05% p.a.(for $0 and over)
- Govt Deposit Guarantee
- Yes up to $250,000
- account fee per month
- $0.00
- Maximum rate conditions
- Bonus rate is made up of the Base interest rate of 0.05%, Bonus interest rate of 1.45% and Notice interest rate of 0.30%. Make at least 1 deposit per month and no more than 1 withdrawal, including internal transfers or external payments. Must enable the Lock Saver Feature. 32 days notice for withdrawal and T&Cs apply.
- Access
- Minimum balance
- $0.00
- Other restrictions
- Savings account only accessible through iOS or Android app. Daily ATM withdrawal limit not applicable.
Read our Mozo Review to learn more about the Grow Saver
^See information about the Mozo Experts Choice Savings Account Awards
Mozo provides general product information. We don't consider your personal objectives, financial situation or needs and we aren't recommending any specific product to you. You should make your own decision after reading the PDS or offer documentation, or seeking independent advice.
While we pride ourselves on covering a wide range of products, we don't cover every product in the market. If you decide to apply for a product through our website, you will be dealing directly with the provider of that product and not with Mozo.