Three saving strategies to help you meet your New Year's resolutions

Want to save more money this year? So do most young Australians, according to new research. There are several paths you could take to reach this goal, and it’s important to consider which may be the best saving strategy for you.

According to a study commissioned by YouGov in consultation with ubank, 87% of the 1000 Australian Gen Zs and Millennials (aged 18-41) surveyed between 3 and 8 November 2022 were planning to set a new year “financial resolution” in 2023. And the financial goal for 60 per cent of those surveyed was to save more in 2023.

There are several saving options available to consider, and the best way for you to save more money may not be the best choice for someone else. It’s important to compare saving strategies and consider how you plan to achieve your resolution this year.

Here are three common strategies considered in the survey and how they could help you save:

Set a savings goal

Setting a general goal like “save more” is all well and good. But how will you know that you’re making meaningful progress, or that you’ve achieved it?

According to the survey, 71 per cent of young Australians say that they typically set a savings target for their specific goal when attempting to save money, with 95 per cent saying that this makes them feel more successful at saving.

Setting a specific savings target, with a dollar amount and a timeframe, can help give you some perspective on exactly what you’re trying to achieve. It can also help you to calculate exactly what you’ll need to do to reach that target.

For example, you could set a goal to save $1000 to go towards buying a new laptop. Using a savings calculator, you could work out that by starting with an initial deposit of $80 in a savings account with an interest rate of 1.78%, and depositing another $80 per month for 12 months, this would see you end the year with $1049 – goal achieved!

This example is for illustrative purposes only, and doesn’t account for fees or other charges. Make your own calculations before making a financial decision.

Separate your savings

A strategy that’s popular with readers of financial self-help books is to divide your money into “buckets” for saving, spending, splurging, and more. Keeping your savings in its own dedicated bank account helps reduce the temptation to use this money for everyday spending, so you can consistently invest in your own future. 

The survey from YouGov and ubank found that 74 per cent of young Australians say that they typically put their money in separate savings accounts or buckets, with 94 per cent saying they feel more successful at saving when using the buckets strategy.

Most banks and other Australian Deposit-taking Institutions (ADIs) offer savings accounts that are structured specifically with savers in mind. But with different savings accounts offering different interest rates, features and benefits, it’s important to compare your options and carefully consider whether you’re choosing a savings account that will suit your financial situation.

For example, many savings accounts only offer a low rate of interest on your savings unless you fulfill the eligibility criteria for the bonus rate – if this would be easy for you to do in your financial situation, it could be an option worth further consideration. If not, you may need to look a little further afield.

Some savings accounts may only offer a higher interest rate for a limited introductory period before dropping to a lower interest rate. This could be helpful if you have a relatively short-term savings goal, but may be less appealing for long-term savers.

You could also consider putting your savings into a term deposit, though these may be better suited to depositing lump sums that you don’t plan to access soon, as term deposits are much less flexible than savings accounts.

Separate your spending

When you bring home money from your job, where does it go? According to the survey, 68 per cent of the young Australians surveyed say they typically use the same bank account for their take-home pay and everyday spending, while 32% say they typically use a different account.

Like with the “buckets” strategy, carefully considering where your money goes could affect how you manage your savings and make progress towards your goals.

For example, you could consider having your salary paid directly into your savings account and only withdrawing the minimum amount you need for everyday expenses, leaving the rest to earn interest over time.

Whatever your age or your saving strategy, it’s important to compare bank accounts before making any financial decisions. If you’re uncertain which options may best allow you to reach your goals, you may want to consider contacting an accountant or a financial adviser.

Compare savings accounts

Compare savings accounts