How to set up a savings account

Looking to plan a family holiday? Saving for a house deposit? Or maybe you just want to stash some cash away for a rainy day?

Whatever your savings goal is, you’re going to need a savings account that will grow and protect your money. But with over 200 different savings accounts available in Australia — each offering different benefits and variables — it can prove tricky to find the right account for your needs.

To take the stress out of the process, we’ve created a simple step-by-step guide on how to set up an effective savings account, so you can watch your money grow from hundreds to thousands.

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1. Organise your finances

Before you even think about opening a new savings account, be sure to organise your current financial situation. Do you have any outstanding debts? Have you created and do you follow a realistic budget? If you answered no, take the time to do this.

Setting up a realistic budget doesn’t have to be a gruelling task. Start by allocating and prioritising your money flow by listing your earnings and expenses. This will enable you to direct your money where it matters most like your bills and home repayments — and evaluate where you can cut costs. To make matters even easier, there are plenty of great online budget calculators that can help you with this process.

If you’re carrying any credit card or high-interest debt, it doesn’t make sense to be putting a lot of money into savings each month until your debts are paid. Before you start saving, set up a debt payment plan — prioritising small debts first and then bigger debts last. Once you have tackled your debt you can work towards saving money.

2. Work out what kind of saver you are

The type of saver you are will play a huge role in determining the type of savings account you should open.

“I’m new to the concept of saving and can only afford to stash away small chunks of cash every odd pay day.”

If you identify with this statement, look into opening an introductory bonus savings account. These accounts often offer the best interest rates on the market and have either low or no admin costs attached.

Introductory bonus savings accounts almost always offer flexible access to your funds, so if you need to access your savings on a regular basis, you have the convenience to do so.

The catch? The bonus rates offered on these accounts only last for a few months, so if you want to make the most out of your savings, you will have to change accounts regularly to maximise your money.

“I’m an experienced saver or looking to save a large bulk of money for either a holiday or house deposit.”

If you’re ready to crank up your savings, consider a bonus saver account. This type of account rewards you with bonus interest each month you add to your savings balance and encourages you to save money on a regular basis.

The catch? Some accounts don’t allow you to make any withdrawals in a month otherwise you will not qualify for the bonus interest.

WHAT IS INTEREST? Interest is an amount earned on funds to be paid on top of a principal or, an amount paid at regular intervals on borrowed funds.

3. Compare popular account options

Once you have established the style of savings account you would like to open, it’s time to start comparing what types of accounts are on offer with different banks.

Introductory bonus savings account

AMP’s Saver Account, Me’s Online Savings Account and Citibank’s Online Saver are three popular introductory savings accounts. Each offers an introductory rate of at least 2.65 per cent for the first four months.

AMP Saver Account: A bonus rate of 2.75 per cent for the first four months from account opening with a standard interest rate of 1.85 per cent per annum from then on. There is no monthly fee or minimum balance for this account.
Me Online Savings Account: An ongoing bonus interest rate of 2.60 per cent if you make at least one tap & go payment per week with an Everyday Transaction Account debit card. There is no monthly fee or minimum balance for this account.
Citibank Online Saver: A bonus rate of 2.65 per cent for the first four months with a standard interest rate of 1.35 per cent from then on. There is no monthly fee or minimum balance for this account.

Bonus saver account

Bankwest’s Hero Saver, Bank Australia’s Bonus Saver and My State Bank’s Bonus Super Saver are three popular bonus saver accounts. Each offers an ongoing rate of up to 2.60 per cent per annum.

Bankwest Hero Saver: An ongoing variable rate of 2.35 per cent when you deposit at least $200 each month and make no withdrawals. There is no monthly fee or minimum balance for this account.
Bank Australia Bonus Saver: An ongoing variable rate of 2.15 per cent when you deposit $100 or more into your account each month and make no withdrawals. There is no monthly fee or minimum balance for this account.
My State Bank Bonus Super Saver: An ongoing bonus interest rate of 2.60 per cent when you deposit $20 or more and make at least five eligible VISA Debit card transaction from your linked account each month.

TIP: Websites like Finder and Mozo offer comparative lists of savings accounts across multiple banks.

4. Put your savings plan into action

Your debts are paid, your budget is allocated and you’ve opened a savings account that perfectly suits your needs; now it’s time to actually put your savings plan into action.

One of the most challenging parts of saving is dipping into your designated savings money when an unexpected expense or smaller-than-anticipated pay check comes along. To combat this, set up an automatic savings plan — it will take the guesswork out of saving each month.

To do this, schedule a recurring deposit from your checking account into a linked savings account. How often the deposit occurs will depend on how often you’re paid and your personal preferences.

Alongside automatic payments, there are a few additional actions you can take to make sure you are making the most out of your savings.