Saving for a holiday and a house
Climbing the corporate ladder is hard work, and you’ll naturally want to take some time out occasionally. Travelling is a great way to rest, recharge and see the world – but how can you take a break when you need to do whatever you can to save for a home?
The good news is that it’s possible to enjoy a holiday without eating into your house deposit. Term deposits and high interest savings accounts offer different ways to grow your savings. Why not use both to your advantage?
Term deposit for stability
Saving up for your own home takes a lot of commitment. If you have a habit of dipping into your savings, putting your house deposit into a term deposit is a good way to keep it safe from temptation. You can choose term deposits from 90 days to five years – generally, the longer the term, the higher the interest rate – and you’ll know exactly how much interest you’ll earn when it matures.
They’re also government guaranteed up to $250,000 (per person, per ADI) and usually fee-free, making them a safe and easy way to grow your savings. It may be possible to withdraw your money before the end of the term, but you may have to give your provider notice to do so, and this may affect how much interest you are paid.
For more savings motivation, here are five tips to maximise your term deposit earnings, or use our Term Deposit Calculator to work out your potential return.
High interest savings account for flexibility
Now that you’ve got your house deposit squared away, it’s time to focus on your holiday fund.
First, work out how much you’ll need for your getaway, including any flights, accommodation and spending money. Next, determine how much you can realistically afford to contribute to the fund each payday based on your income and regular expenses.
Once you’ve set your savings target and contribution amount, you can start looking for the right high interest savings account to make your deposits into. Of these, online savings accounts tend to offer the highest interest rates because they have such low overhead costs.
One major benefit of putting your money into a high interest savings account is that you can access it whenever you want. Not only that, but many providers offer introductory or bonus rates to give your savings an extra boost.
Just remember to check what the interest rate will revert to when the introductory period is over, and take note of the conditions under which the bonus interest rate will apply. These often include incentives for saving, such as limiting monthly withdrawals, making at least one monthly deposit, or maintaining a minimum balance.
Both term deposits and high interest savings accounts have great benefits and can help you build wealth in different ways. By splitting your savings between the two, you can keep saving for a house without sacrificing your travels.
As always, be sure to compare offers to ensure you’re getting a solution that will suit your lifestyle and give you the maximum return.