Looking for an easier way to save money automatically? Savings round up tools, savings account sweeps, apps and good old fashioned direct debits can help you save more money without any hard work or discipline required. Once it's set up, it's a set-and-forget savings plan.
There are several ways to set up transfers into your savings so it happens automatically;
This feature works by rounding up your daily transactions to the nearest $1 amount, and sending that loose change directly to your savings account. For example, if you used your debit card to buy breakfast at a cafe for $17.20, it would round up the value to an even $18 and send the extra 80 cents to your savings account. Or, if you elect to have your transactions rounded up to the nearest $5 amount, it would round the purchase up to $20 and put the extra $2.80 into your savings.
It might seem like a small amount, but if you make several purchases a day this could add up to a lot of money over the course of a few months or a year. Plus, if the extra change from your transactions are being added to a high interest savings account, you'll also earn interest on that money. One account that offers this is the ING Orange Everyday transaction account linked to the ING Savings Maximiser.
| Response | |
|---|---|
| I do not have children | 34.59% |
| 1 - 2 | 12.22% |
| 5 - 7 | 11.5% |
| 14+ | 9.25% |
| 8 - 10 | 8.81% |
| My children are too young for a bank account | 7.46% |
| 0 | 5.93% |
| 3 - 4 | 5.3% |
| 11 - 13 | 4.94% |
You can also use round up tools to round up your daily transactions and add the lose change into an investment portfolio. The most well-known app to do this is Raiz (previously called Acorns). If you download the Raiz app and link it to any Australian transaction account you have round up your purchases and send the extra money to your Raiz account, where it'll be invested in the stock market.
Here are a few bank accounts with free built-in tools such as savings round up.
There are several reasons why it’s worthwhile setting up an automated savings plan, such as using a round up or sweep tool:
The first step when developing an automated savings plan is to work out exactly how much you can afford to save. To do this, you first need to create a budget. Sit down and write out all the expenses that come out of your regular pay cheque, such as food, fuel, entertainment and credit card payments. Add them all up and see how much you have left over. Or, you can use a free app like the Finder App to scan your past transactions and group your spending into different categories automatically.
Next it’s time to work out any areas where you can afford to cut back, such as eating out or an unused gym membership. If there’s anything you pay for that you don’t particularly need or want, eliminate it from your weekly expenses.
Once you’ve done this, you should be able to work out exactly how much you can afford to put aside from your weekly pay cheque to contribute to your savings account, super or other investment account.
If you open a transaction account with a sweep facility, it’s important that you set a realistic minimum limit for your transaction account balance. This will ensure that you always have access to enough money to cover any urgent expenses that may arise.
Just by taking a few minutes to set up an automated savings plan, you can quickly start building a bigger bank balance. And the more you manage to put aside each week, the better.
Once you’ve automated your savings, there’s plenty more you can do to build a bigger bank balance:
Another way to save time and take the stress out of managing your day-to-day finances is to set up automatic bill payments. This can save you the hassle of organising payments every month or quarter when you receive your phone, Internet, electricity, gas, rates or health insurance bills.
You can set up direct debits so that all your regular bills are automatically deducted from your bank balance. This is very simple to do through your online account with each bill provider, or by downloading and completing a direct debit form.
The main benefits of automatic bill payments is that you never have to worry about forgetting to pay a bill, and some utilities and other companies offer a discount when you pay by direct debit.
There are a few key risks to be wary of when automating your savings or any other aspect of your finances. One common problem is forgetting which direct debits you have set up and to whom, which can get confusing and potentially messy when you change banks, close an account or switch energy providers. Make sure you take note of all the direct debits you have in place so you can quickly cancel them if the need arises.
Another risk is if you don’t have sufficient funds in your transaction account to meet an automatic payment. If this happens, your bank might hit you with a direct debit dishonour fee.
It’s also important to take care before signing a direct debit agreement. When you sign this type of agreement you hand control of your bank account over to a third party, so it’s important that you trust the merchant you’re dealing with and know exactly what you’re getting into.
Finally, make sure that you’re aware of what it takes to cancel a direct debit. Your bank may try to charge a fee when you do this, or may require you to visit a branch in person to put a stop to payments.
How much could you save per month?
To give you an idea, the average person saves approximately $720 per month, according to our consumer sentiment tracker (November data). NSW and ACT are the biggest savers, putting away $813 and $895 a month. Families with 2 kids are best at saving for a rainy day. They manage to put away over $940 a month.
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