Savings

Saving is the key to financial security. As a student, I have many expenses and it is very difficult to save. Thus little savings can make a big impact on my lifestyle.

In chapter 3 of Money, it states that "no other factor is as important in becoming financially secure as saving. It's even more important than investment."

Savings = deferred consumption

It is not a spend later on account. Now that is a tricky concept which I had not realised before beginning this course.

Also a high interest online account is better value than term deposits. With term deposits, you can't access your cash in case of emergencies. It is fixed in so you can't take that money out.

From my research, Ubank is the online account to open (which I did and my brother and his girlfriend also have on my advice)! It has a high base interest rate of 5.51%, with a .10% bonus if you deposit $100 per month into the account. I had one question regarding my statement and the customer service was quick and polite. Very impressed with Ubank!

The next highest base rate was ME online savings at 4.85% with Bankwest being the next highest for max interest rate at 5.51%. I personally don't like Bankwest's offer as the rate drops down to 3.75% if you withdraw money.

Another important aspect when looking for savings accounts is to check the frequency of the interest calculation and when it gets paid into your savings account. As it takes time for the compounding power to kick in, the earlier you start the better!!