1. Have a savings goal
There are two ways you can approach a savings plan. You can decide on a percentage you want to put away each month – e.g. 10%, 15% or 20%. Or you can set a specific amount. Let’s say you want to reach $2,000 in six months – in that case, you’ll need to save $330 each month.
2. Set up automatic transfers
Don’t rely on willpower alone to save, because you might be tempted to spend money elsewhere rather than move it into your savings. Setting up an automatic transfer helps avoid this. Remember, out of sight, out of mind – when the money isn’t in your transaction account, you’ll be less likely to spend it.
3. Top up your emergency fund with any additional money
Sold an asset or received a tax return, inheritance or any other windfall? You can quickly boost your emergency savings by transferring one-off windfalls into your emergency fund.
4. Leverage your home loan’s offset account
An offset account is a transaction account linked to your home loan. The balance in that account is offset against your loan balance, reducing the amount of interest you get charged. By putting your emergency savings into an offset account, you have immediate access to that money should you need it; and, if you don’t, you benefit from paying less interest on your home loan.