7 Steps to Savings Account Heaven
So here are the coveted, much anticipated and holiest of savings holies: the Seven Heavenly Savings Virtues - along with the Seven Deadly Sins of Spendthrift Iniquity. If you follow these steps you’ll reach your savings goal in no time!
Savings Account Comparison Table - page last updated September 19, 2020
- MyState BankMyState Bank
Bonus Saver Account
Seven Heavenly Savings Virtues
1. Pat thyself on the back!
The first step is gratuitous self-congratulations for even thinking about savings. Many people choose to ignore the practice of saving and therefore spend a lot of their life in the red. Now that’s no fun! So good on you for starting to think about your financial future be it for short or long term benefits.
That done, you'll want to read up about savings accounts, including the whole of this guide (no skipping the boring bits) so you can get your head around the best ways to make the most on your hard earned money. You can also check out what the Mozo community has to say about savings accounts by reading some reviews.
2. Choose the right high interest account
Yes, this means scouring the market to find a super high interest rate that will earn you stacks on your stash. Before you even think too much about it, it's not as soul-destroying as it sounds. It only take two minutes to find the best savings account!
- Online savings accounts
- Bonus saver account
- Introductory rate savings accounts
- High interest savings accounts
- Minimum deposit savings accounts
- Kids savings account
- Term deposits
The higher the rate the more interest you’ll earn. Even a 1.0% difference in an interest rate can make you hundreds more dollars in the long run. For example, if you started putting away just $200 a month into a savings account with an interest rate of 1.5%, over four years you will earn $287 in interest for a final balance of $9,887. Shop around and find an account offering a 2.5% interest rate and then you’ll be laughing!
Depositing the same amount over the same time and you’ll earn $485 in interest. That’s $198 more, and while that doesn’t sound like much every cent counts towards reaching your savings goal.
3. Draw up a budget to figure out where your money goes
The conscientious saver will track their spending habits for a week or two, to discover where all that missing money ends up (will the mid-morning coffee please raise your hand). Your income minus your expenses will hopefully leave you with a little money leftover which can then become your savings!
When drawing up a budget it’s important to include fixed and variable expenses. Fixed expenses include rent, transport, utility bills and food. When considering variable expenses think of – How much do you want to spend on concert tickets, the movies, yoga classes and clothes? How many nights a week do you want to get take away or do you plan on heading away for a weekend or two? Be true to yourself and your budget, honesty is the best policy!
Check out our nifty budget calculator to get you a step closer to savings account heaven.
4. Axing your budget!
So you’ve done up a budget and you may be a little shell-shocked to discover you spend nearly $1,500 a year on coffee! A habit you may need to cut back on if you want to reach a savings account heaven. However at the same time, don’t be too hard on yourself, allow for occasional pleasures and freak sales, and don't be over-optimistic about your capacity for self-denial.
Here are a few ideas on where you could cut back to increase your savings:
- Buy a coffee machine - but it’s ok to treat yourself to a few lattes every so often
- Wash your own car - this is more fun than watching someone else do it for $50
- Ditch the gym membership - use free outdoor fitness equipment and walk to work
- Pack your lunch – enjoy last night’s leftovers and save yourself $1000 plus a year
5. Save thy change!
Don't spend it simply because it clinks. Just because you receive $2 change from your morning coffee doesn’t mean you have to spend it and pick yourself up a cookie. Hold onto that $2 and stick it in your piggy box when you get home. Before you know it you’ll have saved close to $100 that can be deposited straight into a savings account. For more tips, check out Ways to Save Money.
6. Watch and review
Keep a watchful eye on your savings account as well as the market. We don’t mean check in several times a day but do so frequently. Savings accounts have a standard variable interest rate, so the rate of your account will rise and fall in accordance with the market rates. It’s always worthwhile reviewing your financial position and looking for a better interest rate, especially if you were sucked into choosing a savings account based on its fabulous introductory bonus offer. These promotional offers usually only last a couple of months before reverting to the standard variable interest rate of the account.
7. Automate it
Finally, to really ensure you hit your savings account heaven set up an automatic salary deposit.
This means that a portion of your salary can be automatically deposited into your savings account from your employer each month. This helps lock you into your savings plan and accelerates you towards your savings goal. Setting up an automatic deposit into your savings account is also a great tool if you’re a busy, forgetful person!
Read up more on savings account features, to help your pile of money grow.
Seven Deadly Sins of Spendthrift Iniquity
1. Don’t buy things just because they’re cheap
A dollar saved is a dollar and six cents earned after just one year. Stop and ask yourself “do I actually need that?” Just because those shoes are on sale do you need to add another pair to your collection of 20?
2. Hands off
As much as you may love dipping into your savings account, this is a deadly sin, keep your hands off it! It’s there to grow not shrink. Of course if there’s an emergency and you need to fork out thousands for a new tooth for example then make a withdrawal.
However if not, an extravagant spender needs to be disciplined with their savings account.
If you struggle with this concept, try leaving your credit and debit cards at home when you hit the shops and only carry the necessary amount of cash you need for a week. This could be a challenge but it has the potential to save you hundreds of dollars.
3. Dig out of debt
Get out of debt and stay out of it! Clear outstanding balances on those credit cards (from all that spending you’ve done) before you consider saving money. Once you’re paid off your debt continue to put that money aside into a savings account.
If you have numerous outstanding accounts, considering consolidating your debt. By doing this, you will pay less in interest and be debt free a lot quicker. Head over to the Mozo credit card platform and learn about reducing credit card debt.
4. Spending for the sake of spending
Do you get the guilts if you haven’t used your credit card for a while? If ‘yes’ well don’t! Spending money for the sake of spending is a serious deadly sin of spendthrift iniquity. It’s like throwing money down the drain. So instead, consider depositing those dollars into a high interest savings account where you can watch your money grow.
5. Don’t adjust your budget
Don’t compromise with your budget, if you do, you’re heading down a very slippery slope. If you’ve taken the time and used our handy budget calculator to get your saving on track well do your best to stick to it. Adjusting your budget just so you can spend money on unnecessary items such as clothes or knick-knacks is a deadly sin of a bad saver.
6. Know it all?!
You may be the queen/king of spending but that doesn’t make you the expert saver. It’s important to keep an open mind when it comes to money matters as there’s always new tips and tricks on the best way to save and make more bucks. Keep an eye out for savings account reviews from the Mozo community. Also put into practice advice from our savings account guides this will help you become an angel of savings not a sinner!
7. Is it worth it?
Final thought…What do you want more: a holiday, or some new sunnies to wear on your now unaffordable holiday?
Feel like you've got grip on the do and don'ts of saving and ready to get on top of your savings accounts? Well check out this article on setting up a savings plan.
^See information about the Mozo Experts Choice Savings Accounts Awards
Mozo may receive advertising fees from the financial institutions, issuers of financial or credit products and third party advice providers that are shown on this page. These fees are based on a cost per click, cost per acquisition, or a fixed fee.