Taking small steps to reduce discretionary spending in our daily lives can lead to bigger savings over the long term. But there are other areas where it's possible to discover some smaller wins - in your day-to-day banking for example. Whether you're a novice investor ready to buy your first term deposit, or a self-managed investor, it's a good idea to know what's available and how to take advantage of it.
Here are a few simple and effective suggestions to help you save better, manage your money and build a nest egg for your short- and long-term goals.
Your bank account is more than a place to withdraw money. It can also be the cornerstone of your investing arrangements, such as a "pay yourself first" plan. Take advantage of these simple tips to save some money today and come out ahead over the longer term.
Set up automatic bill payments.
Paying bills electronically avoids the hassle and clutter of keeping paper statements. More importantly, setting up automatic bill payments can help you save on late charges and build your credit history. Paying a late charge of on a bill may not seem like much, but if you are doing that consistently the money adds up.
Pay yourself first.
Having money withdrawn from your bank account and directed to your investment account or retirement savings account on a regular basis is an easy and convenient way to reach your goals - and it won't cost you a cent.
Earn more on your savings.
A high-interest savings account (which is designed for savings, not transactions) is an ideal complement to your day-to-day banking account - allowing you to move money conveniently between your accounts by phone or online.
You earn a competitive rate of interest on each dollar saved and your money's always accessible. Use your high-interest savings account to "park" your cash while you decide on a suitable longer-term investment or build a secure and accessible emergency fund.
With predictable rates of return and security of principal, term deposits are a popular savings vehicle for many. One way to earn more from your term deposit is to lock in to a longer-term product. Your financial advisor will help you to decide which instrument suits you best.
Helping Your Children Plan For Their Future
Kids have a tough enough time understanding how their actions today can impact tomorrow. No wonder lectures on the importance of saving money for the future are often met with rolling eyes and big yawns. But while planning for a healthy financial future is a weighty topic for most children, there are light-hearted ways to get the message across.
Here are some creative strategies for encouraging your children to pinch their pennies for a healthy financial future.
Show them the money
Giving children an allowance is an important rite of passage that can teach them money management skills, including budgeting and saving. When you give an allowance, do so in small denominations, which can help serve as a math lesson and perhaps encourage your child to put aside a small amount each week.
An allowance allows you to teach lessons about saving. The next time your child requests a particular gift, encourage him or her to create a simple savings plan that entails stowing away some allowance each week. Help your child calculate how much money can be saved each month, and calculate how long it'll take to reach this financial goal. As incentive, you might want to chip in a certain percentage of your child's overall savings as interest.
Your child doesn't have to join the labour force to learn how tough it can be to make a living. Instead, help your child set up a neighbourhood homegrown fruit or vegetable market. Putting in a hard day's work is a surefire way to teach them the importance – and challenges – of earning money and why it's so important to save.
Consider opening up a savings account for your child, either with their allowance money or with any money they make on the side.
Unlike a piggy bank, a formal bank account is more likely to instill a sense of fiscal responsibility in your child. What's more, a monthly bank account statement offers your child the chance to watch his or her savings grow over time.
Motivating your child to learn money management skills doesn't have to be a sleep-inducing exercise. With a few creative strategies, you can help teach your child the value of money and its potential for growth. With any luck, these lessons will last a lifetime.