When looking to get into the property market and purchase their first home, one of the biggest challenges many Australians face today is saving the amount required for a deposit, whilst still managing to cover day to day expenses.
However, if you look at the different fees and charges that you may be paying on your bank accounts and credit cards and analyse just what you’re spending your money on, it should be possible to see where you can add to the savings in your piggy bank.
We’ve outlined some tips to help you save your money and build a deposit nest egg.
Finding extra money to save for a deposit isn’t easy at all, particularly with all the costs of day to day living. So, we’ve come up with some hints to help you along the way:
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Watch your account balances – if you have insufficient funds in your bank accounts at any time, you may be hit with overdrawn account fees. Make sure you keep an eye on your account balances, taking into account any regular payments or automated withdrawals and any scheduled bills.
Many financial institutions enable you to check your account balance online, at an ATM or over the phone. If your bank or financial institution offers this service, it’s a good idea to set yourself a reminder to check your balance every fortnight, so that you don’t find any surprise fees on your bank statement.
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Avoid exception fees – some banks and financial institutions charge exception fees, which are fees charged on savings and credit card accounts for dishonoured cheques, late credit card payments, overdrawn accounts and exceeded credit limits.
Talk with your financial provider to find out the circumstances in which you will be charged exception fees.
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Make sure you stay under your credit card limit – if you go over your credit card limit you can incur with fees and charges. Some financial institutions will let you switch off the ability to exceed your card limit so that you can’t over spend. .
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Don’t be late with your credit card repayments – if you forget to pay your credit card each month, in many cases you can look forward to an extra cost on your statement – a late payment fee.
It’s important that you pay at least the minimum monthly repayment on your credit card – before or on the due date. So, put a reminder in your diary, calendar or phone so that you don’t forget. Alternately, if you have access to internet banking you can program an automatic minimum monthly repayment to go over to your credit card account each month and add in any extra money that you can afford at the time your statement is issued to help further reduce the balance owing.
If you want to keep your credit card fees to a bare minimum, use your credit card for your purchases each month and pay the entire balance off in full before the end of the month. This way you have the benefit of using credit, but don’t incur the costly fees and interest charges.
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Use SMS alerts to stay up-to-date – some financial institutions offer SMS alerts to customers to help them monitor and track all activities on their bank accounts. If SMS alerts are available to you, consider using them to keep track of any transactions that take place on your account, monitor your balances and track where you money is going. Additional SMS charges may be payable so make sure that you check with your financial institution.
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Use a ‘sweeps’ facility to keep your balances healthy – some financial institutions offer what is called a ‘sweeps facility’ which means that funds will be automatically routed from one account to another when / if your bank account is at risk of being overdrawn due to a direct debit or bill transaction.
Given that many financial institutions charge you fees for being overdrawn on your account, having a sweeps facility programmed to ‘do the thinking’ can not only potentially save you unnecessary fees, but can also save you from embarrassing situations.
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Know what to expect when you use an ATM – some financial institutions charge their customers a fee to use the ATM facilities of another institution. So, it’s best to use an ATM that belongs to your bank or financial institution or one with which they are aligned and is therefore ‘fee-free’.
Find out from your financial institution if they have agreements with any other financial institutions for you to use their ATMs free of charge. You can also speak with your financial provider to find out the location of all their ATMs – some will provide an SMS service which can send you the location of the nearest ATM if you SMS the area code you’re located.
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Consider not proceeding with a transaction if you will incur a fee– if you are using a ‘non bank’ ATM to conduct a transaction, you may be charged an additional transaction fee. The ATM operator has to show this fee on the screen so that you are aware of the fee you will occur and can decide whether to proceed with the transaction or not.
If you are going to be charged an extra fee for using the ‘non bank’ ATM, don’t authorise to proceed with the transaction unless you are prepared to pay the fee.
If your financial provider doesn’t have a large number of widely spread ATM facilities, you should speak with them to find out if there are any ways in which you can use alternate ATM facilities without incurring extra operator fees.
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Access your cash when you shop – you can avoid costly account transaction fees by taking out extra cash via EFTPOS when doing your supermarket shopping. Some financial institutions charge after a certain number of account withdrawals or transactions each month, so make sure you know what your allowance is and don’t exceed it.
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