Tips and treasures

Banks… If You Can’t Beat Em Join Them

Posted:05.17.2012

So the banks are the focus of a traditional post RBA rate movement ‘bashing’ which is understandable as Australian’s will generally be effected in some way or another because they either

1/ have a home loan

2/ have savings account or a term deposit

3/ are a shareholder

Now banks provide a service and Australian banks are as strong as any in the world which was demonstrated through the GFC as other banks around the world were defaulting. Now as per any other business, banks are out there to make money for their owners, ie their shareholders of which many Australians are either directly or through their superannuation funds and if you are not all in cash or self manage your fund the chances are you are invested in them as well.

But just as a business like your local supermarket, they have a product to sell. To enable them to have this product to sell they need to buy that product and the difference between how much they buy the product for and sell the product for is their margin which the use to generate a profit which they can then return to their owners/shareholders. The banks product is however lending money, so to lend money they have to buy money…… to buy money the banks can do several things, one of which is borrow it from depositors, ie savings accounts and term deposits for a certain interest rate and then lend that money out at a different  interest rate. The difference of which is the margin they keep for the service.

Competition among the banks for the consumers money ie term deposits and debt will push this margin down and ensure the consumers win but the banks will also always try to keep this margin at a suitable level to keep their owners/shareholders happy.

The trick is to remember that when all this noise is out there – the effect of how the bank reacts to reserve bank cash rate changes will differ for each person, depending on whether you are a borrower, depositor or shareholder.

How do interest rate changes affect you?

Alisdair Barr is the founder of Future Map, a dynamic financial literacy program focused on building life planning and financial literacy skills in the workplace. Having held senior leadership roles for the last 10 years at Commonwealth Bank of Australia, he is passionate about reducing complexity and helping to map out a better future for all Australians. More from Alisdair on www.futuremap.com.au

Build Your Savings

Posted:01.19.2012

By Arienne


We all know that saving is a good thing but how many of us actually do it? Taking a little time to work out what you are saving for and what savings strategies work for you will pay off. Literally.

We’ve put together a simple 6 step process for helping to build your savings.

1. Having a motivating reason to save should be your number one thing to do.

People tend to save for two reasons:

  • To have a buffer/emergency fund;
  • To save towards a goal for later spending such as big ticket items or events like holidays, starting a business, house deposits and weddings.

Being clear on what you are saving for, and why that reason is important, will keep you more motivated. For example, I want to save for a house deposit so I can live in a place I call a home. Somewhere safe, cosy and a place I can entertain my friends and build my family life. Or, I want to save a certain amount of money so I can start the business I’ve been dreaming of. It means that I will be able to work flexible hours and give value to people.

2. Work out how much and by when.

Setting a savings goal. Come up with a specific amount. You need to be clear. Also, set a specified timeframe. Then break it down.

For example, I’d like to save $3000 for a holiday in September.  Which means I have 8 months to go. 3000/8=375 and I get paid fortnightly, so I would need to put aside $187.50 per pay.

Is the break down realistic? Use your budget to see how much you can save each pay. Remember, you don’t want to have it so tight that you are sacrificing too many things to achieve this amount.

3. Automate your savings

Once you have worked out how much you need to put aside, set up an automatic savings plan with your high interest savings account. One way of doing this is to set it up so it automatically takes out the $187.50 the day after you get paid. This takes the thinking out of building your savings.

There are also other ways you can save money in your everyday life. One of our 10thousandgirls suggested saving every $5 note you get. Or put some clear glass jars aside for your goal and add coins to it whenever you come home. Get on your bike and ride to work and save the bus fare. If you have other suggestions you’d like to share please do so on this blog post.

4. Spend less

Another thing to think about when you are building savings is spending less. This may be through shopping smartly, cutting down on luxuries and negotiating with your telecommunication and other suppliers. Our other topic of the month is smart shopping so look out for upcoming podcast and other resources around this.

5. Check in and keep track. Stay motivated.

Once you start the ball rolling, do a few things to help you stay on track and motivated. See your savings amount grow on a regular basis. Some high interest savings accounts have graphs that you can refer to see the amounts you have saved so far. It can be quite satisfying to watch the growth!

Also, regularly remind yourself of the reason you are saving for and the feelings you will experience when you get it. You could also share your goals with a trusted friend that will help keep you on track.

6. Enjoy and Celebrate.

Once you reach your goal, don’t forget to celebrate! This may take the form of a toast to yourself, a luxuriating bubble bath or that mani/pedi you’ve been putting off. Just make sure the celebration doesn’t cost you too much! And then enjoy the holiday/house hunting/fridge buying experience.

So, know what you are saving for and why, choose some strategies that work for you, keep yourself motivated and on track and then enjoy the result. And then celebrate away! Go get saving gals!

Photo Credit

All of the above are only suggestions. Please ensure you choose a strategy that is right for your situation and needs.

Arienne Gorlach is 10thousandgirl’s content manager. She has a few high interest savings accounts labelled with such exciting names as Holiday, Emergency Fund, Savvy Sassy She (the business she is starting) and General Savings (she has just realised she should make them less boring). And is a bit of a fan of setting up Automatic Savings Plans and then forgetting about them and then being really excited by the amount she has actually saved…


The Little Book of Year-End Year-Start Goodness

Posted:12.19.2011

Zoe Lamont and Arienne Gorlach have lovingly put together this little book just for you. They’ve assembled a range of exercises and activities to help you summarise the last year and plan inspiringly for the next.

10thousandgirl are sending it out as a Christmas gift to you but it is also available to download below as well.

‘What is it?’ you ask?

Well it is a series of fun exercises to help you gain clarity and purpose around the year ahead after processing the reflections from the past 12 months. The booklet covers areas such as:
     Reviewing the events and highlights of 2011;
     Collating in one place the things you are grateful for;
     Building or amending your bucket list;
     Reassessing your goals and creating new ones for the upcoming year;
     Setting your intention and priorities for 2012;

And more…

Download ‘The Little Book of Year-End Year-Start Goodness’ gift in Word so you can write in the booklet or in PDF for easier printing.

We’d love for you to share your stories and support for each other in the comments section below.

Here’s to a 2011 that taught us a lot and to a 2012 that will be packed with whatever you want it to be!

Vive,
Zoe and Arienne and the Team at 10thousandgirl

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    Banks… If You Can’t Beat Em Join Them

    17th May 2012

    So the banks are the focus of a traditional post RBA rate movement ‘bashing’ which is understandable as Australian’s will generally be effected in some way or another because they either 1/ have a home loan 2/ have savings account or a term deposit 3/ are a shareholder Now banks provide a service and Australian [...]

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