DO BANK ACCOUNTS HELP YOU SAVE?

DO BANK ACCOUNTS HELP YOU SAVE?

There’s a leading question for you. And the answer is, not as much as they should.

WHAT’S THAT YOU SAY?

Sure, an account is somewhere you can put your money and the more convenient it is the better. Mobile banking, linked accounts and real-time transfer are all great tech features. But the reality is, interest rates are super low. Sad face. That means, none of us are going to build up our savings balance by relying on high interest alone. But that doesn’t mean you won’t ever get ahead. With the right mindset and knowledge, you’ll be on the path to better off in no time.  It really just comes down to you and your savings habit.

SIMPLE MATHS

Just in case you’re still in denial, here’s a bit of a mathematical reality check.

2% interest a year on $50 = $1

2% interest a year on $500 = $10

So how much do you need to put away to get $100? Yes…it’s $5000 – quite a lot to put in for a handy but hardly life-changing sum of money.

SAVINGS ACCOUNT CATCHES

It’s also worth keeping an eye out for tricky language about savings accounts, like big promises of bonuses, special rates and so-called rewards that are designed to make you think your money will be working hard for you. They sound enticing, but often the reality is quite different.

Common examples include ‘bonus rates’ or ‘honeymoon rates’ that are filled to the brim with conditions – you can’t take money out, you have to put a certain amount in each month or you’re forced to open a spending account. The other one is fees. When it comes to savings accounts, fees should be a no-go. These savings account catches may mean your bank balance may not grow as fast you’d hoped.

SO WHAT’S THE ANSWER? GET A HABIT GOING

Even with low interest rates and cheeky catches you can still get ahead.  It just means you need to get a habit going – a savings habit. Saving often, no matter the amount, is key. It’s your actions that will make the difference, not the account. Saving small amounts regularly really can be the road to better financial wellbeing.

So despite what banks say when trying to sell you a savings account, the truth is, it’s your regular savings habit – not the account- that will set you on the path to being better off.