How to make your bank accounts work for you
Getting control of your bank accounts is the first step to making the most of your money.
If you’re smart about how you set up your accounts and keep a simple structure, you could be more equipped to earn or save interest and keep your fees low.
By simply splitting your accounts, you’ll be able to manage your psychological and emotional attachment to your money, to your advantage.
Here are a few different ways you can split your accounts:
- A daily transaction account where all your spending occurs, you can set daily, weekly or monthly allowances to keep your spending under control and your budget on track.
- A bills account which all your direct debits and payments come out of, so that you can keep this cash separate. Make sure your bills get paid and avoid the temptation to spend.
- High interest savings accounts – one for your emergency fund and another for the savings you have put towards other goals like taking a holiday.
- Sinking funds for any other bills you need to save for that aren’t direct debited regularly. For example, car registration, water or rates bills that are paid on a quarterly or annual basis.
If you have a home loan, you may be able to open an offset account in place of a high interest savings account.
This type of account is linked to your loan and the balance of it works to reduce the interest you pay on your home loan, so instead of accruing interest you are saving interest.
Every provider offers different options so it’s best to contact your lender and see what your bank can do for you.
Most importantly, having a structured account system in place means you can assign a purpose to every dollar you earn. It makes it easier to have visibility over different aspects of your money, makes you feel proud of where your money goes and helps you to work towards multiple money goals at once.
So, get your banking assembly in place and make your money work for you.
The information in this article has been prepared for general information purposes only and not as specific advice to any particular person. Any advice contained in the document is general advice and does not take into account any person's particular investment objectives, financial situation or needs. Before acting on anything based on this advice you should consider its appropriateness to you, having regard to your objectives, financial situations and needs.
RACQ Financial Planning Pty Ltd (RACQ FP) is a Corporate Authorised Representative (Representative No. 293929) of Actuate Alliance Services Pty Ltd (Actuate), AFSL 240959, ABN 40 083 233 925. Actuate is wholly owned subsidiary of IOOF Holdings Limited ABN 49 100 103 722.