Why mastering savings in your 20s can help set you up for life
Knowing how to effectively save is an important life skill and the earlier you can perfect this skill, the more your savings can grow.
When you start earning money from your first proper job, usually in your late teens and early twenties, it is easy to splurge and burn through your weekly pay cheque because it is exciting and new. While it is okay to treat yourself every once in a while, it is also important to learn how to save and get the most out of your money. .
The best way to save is to get into a routine that works for you so that saving becomes almost automatic. Getting into this routine at a young age can set you up for a life and help you avoid making common mistakes that a lot of people continue making much later in life.
For instance, having a proven savings track record is often a criteria for getting approved for a home or personal loan, and can even mean qualifying for lower interest rates, so the more that you are able to demonstrate good long term savings and spending habits the better off you could be when it comes to making some big purchases later on.
5 tips to help you save
Following these 5 easy steps can help you get into the habit of tracking your spending and in return, boost your savings.
- Open a high interest savings account. There are multiple options available specifically for young people. Having a high interest savings account will mean that you earn money on your savings without actually doing anything (bare in mind, a lot of savings accounts have monthly criteria you have to follow to get the bonus interest rate). To make saving easier, you can choose to automate your savings - meaning that you choose a certain amount of money to transfer to your savings account every week or month without having to think about doing it manually.
- Create a budget. Creating a realistic budget and doing your best to stick to it is one of the best ways to maximise your savings. Check out our budget calculator and our guide on how to create a budget if you need help!.
- Make a savings goal. Having an achievable long term savings goal - for example, to save $5,000 by the end of the year will help keep you motivated and accountable. Make sure that the goal is realistic and figure out how much you have to save each week in order to reach this goal in the allocated time period.
- Cut back on food and drink purchases. I know how easy it is to spend money on food, especially when at uni or on your work lunch break but bringing snacks and meals from home or making a coffee at home and taking it with you will help reduce your weekly spend, allowing you to save more.
- Try a round up app. There are multiple banks that allow the option to turn on the “round up” function which allows you to choose to round up each purchase to the nearest $1 or $5 and the extra money automatically goes into a savings account. This is a simple way to grow your savings without even thinking about it.
Luckily, there are options for bank accounts that provide high interest savings accounts for young people which can help you maximise your savings and get ahead.
BOQ Future Savings Account (14-35 years old)
- Maximum interest rate of 2.0% up to $50,000
- No monthly fees
- Round up feature is offered on this account
If you’re looking for a high interest savings account specifically for young people (14-35 year olds), this account could be a good option for you. The BOQ Future Savings Account offers a maximum interest rate of 2.0% p.a but in order to access this rate you have to deposit a minimum of $1000 and make a minimum of 5 eligible settled transactions each month, however if you are between the ages of 14-17, you can earn the maximum interest rate without these additional steps. The 2.0% interest rate only applies on balances up to $50,000 - the rate drops to 0.8% for balances of $50,001 to $250,000 and 0.05% for over $250,000. The Future Savings Account can be managed via the myBOQ app and there are no monthly fees for this account. BOQ also offers a round up feature, meaning that you can choose to round up any purchases made on your BOQ Everyday Transaction Card to the nearest $1 and the round up amount will be deposited straight into your savings account.
Westpac Life (18-29 years old)
- Max interest rate of 2.0% p.a. on balances of up to $30,000
- No minimum balance
- Winner Young Adult Savings Award - Mozo Experts Choice Awards 2022^
Designed specifically for younger Aussies, the Westpac Life (18-29 years old) savings account has one of the most generous maximum interest rates at 2.00%. To earn the maximum rate, you will need to grow your balance of under $30,000 and make at least one deposit into the account each month as well as making at least five settled transactions per month with a Westpac Choice debit card. Account holders also have to keep their account balance above $0. If you don’t grow your balance during the month but still make the minimum of five card transactions, you can earn 1.75% p.a. interest. The Westpac Life account has a base rate of 0.15% when the required conditions of the bonus rate are not met. Savers can access the account in all the usual ways, including over the phone, online and via the Westpac banking app. There is also a $5 monthly fee, but it’s waived if you deposit $2,000 or more each month.
ING Savings Maximiser
- Max interest rate of 1.35% p.a. on balances of up to $100,000
- No account fees, withdrawal fees or minimum balance
- Round up feature is offered on this account
If you’re looking for a savings account with a competitive interest rate on your savings of up to $100,000, the ING Savings Maximiser could be a good option for you. This account offers a max interest rate of 1.35% p.a. on balances of up to $100,000 but in order to earn this high interest rate, you must deposit at least $1,000 from an external source to any personal ING account in your name and also make at least 5 settled card purchases using your ING debit or credit card each month. Account holders also have to grow their savings balance each month (excluding interest). If you do not meet this monthly criteria, you will earn 0.05% interest for that month. The Savings Maximiser Account can be managed through the ING app, online or at an ING branch. This account does not come with any account fees, withdrawal fees or minimum balance.
The ING Savings Maximiser Account also offers a round up feature, meaning that you can choose to round up any purchases made on your ING Orange Everyday card to the nearest $1 or $5 and the round up amount will be deposited straight into your savings account.
^See information about the Mozo Experts Choice Savings Account Awards
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