Australia boasts one of the most successful mixed economies in the world.
The bulk of which is rooted in the service sector comprising education, tourism, health and welfare, professional and banking services, and mass media.
Besides popularity as one of the most attractive holiday and emigration destinations in the world, Australia also enjoys status as a major economic player as a member of the G20, WTO and APEC. It is currently one of the wealthiest countries in the world with a per-capita GDP surpassing those of both Germany and France, the most stable economies in the European Union.
Online Savings Account Offer
Ongoing 3.05% p.a. variable rate when you link to a ME Everyday Transaction account and make a weekly purchase with your Debit MasterCard using tap & go. Available on balances up to $250,000.
- Bonus Rate: 1.75% p.a.
- Monthly Account Fees: $0
- Minimum Balance: $0
- Minimum Deposit: $0
Compare your savings accounts options today in the table below
Budgeting to save
As a result, the average Australian enjoys a relatively high standard of living and can often afford to put away a portion of income as savings. In November 2015, the Australian Bureau of Statistics pegged average weekly earnings of an adult working full-time at around $1,500. Whether or not people earning this amount can save – and how much – depends on individual circumstances and budgets (family, expenditure, rent or mortgage, car payments, credit cards etc.).
A 2016 Suncorp survey reveals that Australians are putting away on average around $400 a month, with the most diligent savers in the 25 - 34 age group. Typically people in the higher age bracket own homes, vehicles and have families to support, which translates into less money diverted to savings.
Why do we save?
How exactly do Australians plan on spending their savings? The Australian Bureau of Statistics reports that overall credit card debt in 2016 is down in Australian households, along with mortgage rates and the number of households struggling with repayments. Some of the main reasons for saving include:
- Schooling and university fees
- Unforeseen circumstances
Besides no monthly fees charged, most banks encourage customers to save with an attractive introductory interest rate, after which it reverts to the standard rate. This means that you earn interest at an accelerated rate on your savings for the first few months after opening the account. For example, the Westpac eSaver account offers an additional 1.36% p.a fixed on top of the standard rate for the first three months after the account is opened.
The bigger your initial deposit and the less you interfere with it, the more you earn. Some banks also offer a boost for ensuring you maintain a positive balance at the end of the month (excluding interest).
Paying off debt versus savings
A credit card is a convenient way to pay for things when you don’t have cash on hand, but it can become a crutch and gateway to living beyond your means. Committing to saving is a positive step, but having to pay off a credit card at the same time means you’re off to a slow start. If you’re serious about saving, put the majority of your would-be savings towards clearing the debt and put a small amount aside as actual savings. This may require a few lifestyle changes, but this method ensures tangible progress as you reduce negative debt and slowly start building on your savings.
Lola and Jason, both 28, just tied the knot and received $15,000 in cash and cheques from wedding guests. Both have full-time jobs in the mining sector and earn around $16,000 a month collectively. Jason inherited his grandmother’s townhouse just outside Sydney, so besides monthly shopping, entertainment and car instalments, they don’t have many major expenses.
The young couple would like to start building on their wedding money over an eight-year period, eventually saving enough to either 1. purchase an additional property as a holiday rental, or 2. invest in a banana farm on the South African east coast.
They decided to compare savings accounts, interest rates and how much they would earn on their savings with regular monthly deposits of $1,000 and a starting balance of $15,000.
|Bank 1||Bank 2||Bank 3||Bank 4|
|Base interest rate||2%p.a.||1.75%p.a.||1.75%p.a.||1.55%p.a.|
|Bonus rate||3% p.a. on balances up to $100,000||+0.5%p.a. If balance is $300/higher on first business day of the next month||+1.36%p.a. introductory rate for the first three months||+1.35%p.a. Introductory rate for the first three months|
|Total at term||$121,613||$120,216||$120,303||$119,115|
Lola and Jason deposit $111,000 over an eight-year period on top of their initial investment. The total at term varies depending on the bank’s interest rates and bonus offers. All the accounts above offer the following benefits:
- No monthly fees
- Direct debit into savings account - minimum administration
- Linked to everyday transaction accounts (sometimes at other institutions)
- Bonus rates
- Better rates as the savings amount increases
- Online access and management