Open A Savings Account

Essential Steps to Opening a Savings Account

To open an account you need to look for accounts which will allow you to split your wages four ways each pay day – into an everyday account, an account to cover your bills and expenses, a long term savings account and an emergency fund. Depending on your cash flow and your spending and savings habits you may prefer to open an account which can be split into four sub-accounts, or you may want to open four new accounts to manage your savings. What you will need to do is organise for your wages to be split four ways – either by organising a direct debit with your current provider, or asking your payroll department to split your wage into four different accounts – to divert:

• A 35% portion to your everyday account.
• A 50% portion to your expenses account.
• A 5% deposit to your long term savings goals.
• A 10% contribution to your emergency fund.

Savings Account	Maximum Variable Rate p.a.	Standard Variable Rate p.a.	Bonus Interest p.a.	Fees	Min Balance/Min Deposit
UBank USaver	5.51%	4.91%	0.60%	$0	$0 / $0
Citibank Online Saver	5.7%	4.25%	1.45%	$0	$0 / $0
ANZ Online Saver	5.5%	3.75%	1.75%	$0	$0 / $0
St.George Maxi Saver	5.7%	4.30%	1.40%	$0	$0 / $0
Easy Street Bonus Saver Account	5.61%	0.01%	5.60%	$0	$0 / $0
NAB iSaver	5%	3.65%	1.35%	$0	$0 / $0

Open an Expense Account

It makes good financial sense to ensure that no more than 50% of your income is going towards your bills, mortgage, expenses and other commitments and when you have an accurate working budget, you will know exactly what your expenses figure is. As a result you can have that amount directly credited to a transaction savings account which allows you to easily make deposits and withdrawals to pay your bills.

With the money set aside for your bills from the time you are paid, you don’t have to worry about having your phone cut off or defaulting on your mortgage because all the money you need is there. You will feel liberated knowing that no debt collectors will be knocking down your door and you don’t have to dodge any embarrassing phone calls to beg for just a few more days to pay your bills and removing this money stress from your life can go a long way to a more satisfying lifestyle.

You will need to open an expenses account which includes a significant number of free transactions each month – or better yet, unlimited free transactions. Also look for a low or zero account keeping fee because at the end of the day that is just another expense to add to the list. You are unlikely to find a transaction account which pays you a high rate of interest but that’s alright because your longer term goals are benefiting from a different account type.

Open a Long Term Savings Account

Everyone has long term goals which require a healthy savings balance whether you want to save up to go and study at university, whether you want to finally take that trip around the world or you want to treat your family to a new car with better air-conditioning! To help make those goals happen you will need to open a savings account because clarifying and visualising those goals is just the first step.

Next you will need to set a realistic time frame where you strike a balance between what you are willing to go without in order to channel funds towards your long term savings, and how long you are prepared to wait to realise those dreams. With your goal amount and your timeframe set you can open an account and start depositing 5% of your pay check each week.

Now you are ready to actually open an account so look for an online savings account because it will be able to offer you the highest rates and the lowest fees. Plus you will have limited access so you won’t be tempted to spend your savings before you reach your goal.

Open an Emergency Account

It makes good financial sense for everyone to have an emergency savings account, no matter how secure you feel your job is and no matter what other types of insurance and income protection you have. The general rule is to save enough money to cover three to six month’s worth of expenses and when you divert 10% of your wage to your emergency account you’ll reach that goal in no time.

However, just because you reach your emergency fund goal amount doesn’t mean you shouldn’t keep contributing. Firstly, you’ve gotten into the habit of sending 10% of your wage to your emergency savings account and secondly not all unexpected expenses can be deemed emergencies, but they need a quick injection of funds nonetheless.

Therefore, while keeping your emergency fund topped up to your three to six month’s worth of expenses, everything you save on top of that is cream. You can enjoy this cream by making an investment on a project or property which comes up, paying off credit card or personal loan debt, moving out of home or even starting your own business. This cream can fund your freedom and that is after all what having financial control is all about – gaining freedom, and it would be a real emergency if you lost that.

When looking to open an account for your emergency fund, look for another high interest, online, fee free savings account similar to the one you are using for your long term goals. This may even be where you use a sub-account of a high interest savings account to label part of your savings for your goals and the other part for emergencies.

Open an Everyday Account

The 35% of your wage that you have left in your everyday transaction account is now free and clear because you have taken care of your bills, the security of your financial future and your savings plans and the rest is yours to do with as you please. While you may think that living within a budget is restrictive and means you miss out on all the luxuries you enjoy, you will realise that the opposite is true when you have this portion of your wage to use without obligation.

You still want to make sure you open an account which has low transaction and monthly fees, but one which also allows you to access your funds online, at an ATM or by using EFTPOS. This leaves more of these all important funds for you to enjoy, and ensures that you can access the money wherever and whenever you choose to spend.