When planning ahead many Australians set up savings or investment plans to guard against the future. Being careful with your money is a part of being smart with your earnings, but how do you measure financial intelligence? Is it by the percentage that’s regularly saved from your income or the number of months you can live without any additional income?
You’ve worked hard to save and you don’t have to be a big-time investor to have your money make money. But, you want to make sure your nest egg isn’t getting picked off little by little while you continue to build it, be sure to put your savings where it will earn additional interest.
Infographic: How Australians Are Saving Money
Four Facts To Know About Your Savings
1. You’re Not Alone
People who save at younger ages (20s) are typically influenced by people (mostly family) who’ve learned to be practical with money. People in their late 30s and 40s who just start saving have generally stumbled through their own financial pitfalls and learned enough to get smarter about it. Unfortunately, some people never learn and live from one pay to the next pay.
The current statistics show that:
• 36% of adults worldwide save money.
• 70% of Australians save money.
• The average saved by an Australian is $830.00 a month.
• 58% of younger Australians save their money in accounts that earns High Interest Rates.
2. Know The Difference
Save your money in a savings account rather than a transaction account in order to gain higher interest.
When you open accounts with banks, your transaction account is your virtual wallet. You put money in when get paid and you take money out for bills and expenses. Banks have gotten nicer when it comes to charging “transaction fees” but transaction accounts do not gain interest.
Money in your savings account may not be withdraw-able immediately, meaning there is less chance you will spend it on impulse buys. Your account will earn higher interest the more money you keep in it and longer you leave it there.
3. Earn Monthly Interest, Not Monthly Fees
Only 6 out of 10 Australians track and are aware of their banking monthly fees. 43% of account holders say that they don’t worry about monthly fees. 45% pay up to $10 in fees and 11% pay more than $10 in fees. Some banks charge you for not having money in your accounts, and reward you when you do have money. Even banks incentivise saving.
The account holders that generate high interest save more than 10% of their income. There certainly is something satisfying about watching your savings grow. It’s best to know what charges your bank has in order to get the most out of your savings plan.
4. Smart Buying
The most common way to save is to be practical with purchases, shop around and get a bargain.
When it comes to smart buying, 73% of women are more likely to sacrifice spending in order to meet their saving targets. Where only 63% of men do the same, perhaps this is why more women manage household budgets. Being careful with your spending is great way to put aside money for a large future purchase.
You could be saving for your retirement, a car lease, and new house, more education, a rainy day (emergencies) or sunny day (holidays).
Financial intelligence is not just being smart about how you spend money. It’s also about being smart about your savings.