10 steps to help you save money and protect your finances

SEAN CALLERY
Deputy Editor · 29 March 2021
While there have been some positive signs for Australia’s economy following the coronavirus-induced recession, many households are still keeping a close eye on their budget, particularly as some temporary government stimulus schemes draw to an end. Here are 10 steps you could take right now to help you save money and shore up your finances.
how to save money
Source: Jacob Lund (Shutterstock)

1. Ask yourself if you could be doing better with your home loan

If you’re trying to cut back on some expenses, one possibility is to look closely at your home loan and how much you’re being charged. Interest rates are at historically low levels, so now could be a good time to compare and find a better deal. At the time of writing, analysis of Canstar’s database of over 4,000 products shows there is a 3.50 percentage point difference between the lowest advertised standard variable interest rate and the highest, and a difference of 1.41 percentage points between the lowest rate of this type and the average, based on a $400,000 loan at 80% LVR over 25 years. Using these hypothetical loan criteria, an owner-occupier borrower currently paying back principal and interest at the average rate (3.36%) who refinances to the lowest rate of 1.99% (comparison rate 2.05%) could:

  • save up to $280 per month in repayments
  • reduce the total amount of interest paid over the life of the loan by more than $83,000

(For the purpose of this example, we’re assuming that the rates above remained the same from now on.)

Fixed rate loans listed on Canstar’s database also have a wide variance between the cheapest and highest advertised rates. Fixed rates are recorded as being as low as 1.74% (comparison rate 2.23%) for a two-year fixed loan at the time of writing. These fixed rates are based on principal & interest owner occupier loans of $400,000 with an 80% LVR on Canstar’s database, includes new-to-bank interest rates (including specials), but excludes excludes honeymoon, intro-rate, and first home buyer-only home loans.

Compare home loan rates for refinance

If you’re currently considering a home loan, the comparison table below displays some of the variable rate home loans on our database with links to lenders’ websites that are available for homeowners looking to Refinance. This table is sorted by Star Rating (highest to lowest), followed by comparison rate (lowest-highest). Products shown are principal and interest home loans available for a loan amount of $350K in NSW with an LVR of 80% of the property value and that offer an offset account. Before committing to a particular home loan product, check upfront with your lender and read the applicable loan documentation to confirm whether the terms of the loan meet your needs and repayment capacity. Use Canstar’s home loan selector to view a wider range of home loan products.

→ How does your loan rate? Compare all home loans on Canstar’s database.

2. If you’re looking for a low-risk place to keep your cash, consider shopping around for savings rates

The flip side of low interest rates for homeowners is a more challenging time for savers looking for good returns. In short, you may need to work a bit harder to keep your money growing.

“With savings accounts, to get a decent rate these days, you rely on either achieving the bonus conditions or moving your money to a different bank after the expiry of any introductory period,” Canstar finance expert Steve Mickenbecker said.

If you’re shopping around, be mindful of the conditions and withdrawal restrictions some institutions may place on deposit products in return for their sharpest rates. For example, you may need to deposit a certain amount each month and make no withdrawals in order to earn the bonus interest.

At a time of economic uncertainty, you might be wondering whether your money will be safe in the bank. The Australian Government guarantees up to $250,000 of funds per person in official Authorised Deposit-taking Institutions (ADI). That means if one of these institutions becomes bankrupt, the government will repay each customer up to $250,000 of the total funds they have with that bank.

Canstar only lists ADIs in our comparison database for savings accounts, transaction accounts and term deposits.

How do your returns stack up? Compare all government-guaranteed term deposit accounts and savings accounts on Canstar’s database.

3. Capitalise on low rates: Is it worth consolidating existing debts?

If you are concerned about existing debt, staying on top of repayments or how much interest you’re accumulating, you may have some options available.

For example, it could be a good time to consider consolidating your debts. This means combining multiple debts into a single loan or credit card, ideally one with a lower interest rate than your existing debts. At a time of historically low interest rates, this could be one way to save yourself money in interest while making your repayments more manageable.

Two common options are debt consolidation personal loans and credit cards that allow you to transfer the balances from other debts onto a new credit card. Below we have rounded up some of the options on our database for personal loan debt consolidation. Alternatively, you could use our comparison tables to shop around for credit cards that can be used for debt consolidation.

Remember, though, that once you have consolidated your debt to a new loan or credit card, it’s generally a good idea to pay off the balance as quickly as possible.

In particular, be mindful that credit cards with a 0% balance transfer offer (sometimes with an accompanying fee attached) generally begin charging interest on the balance at a relatively high rate once the initial interest-free offer expires. It could also be a good idea to consider the annual fee or other fees charged, and – if possible – to avoid any new purchases on the card, as the provider could start charging interest on these purchases right from the start.

Compare personal loans

The table below displays some of our referral partners’ unsecured personal loan products for a three-year loan amount of $20,000 in NSW. The products are sorted by Star Rating (highest to lowest) followed by comparison rate (lowest to highest). Use Canstar’s personal loan comparison selector to view a wider range of products on Canstar’s database. Canstar may earn a fee for referrals. Read the Comparison Rate Warning.

4. Could you be saving on your car and home insurance?

Insurance is designed to be a safety net if the worst should happen, and choosing the right insurance policy now could end up saving you money in the future. There are a number of ways that it might be possible to reduce the costs of your car or home and contents insurance premiums:

  • Find the best deal for the amount of cover you need. Car and home insurance premiums are calculated based on the value of the vehicle or property that needs to be covered and the risk that insuring it represents. Different providers can often weigh up that risk differently, so it could be possible to swap insurers to find a lower price. For example, with home insurance, different companies could view the risk of robbery in a particular suburb differently. Be sure to read the Product Disclosure Statements and other important documentation carefully for any policies you’re considering, though, to ensure you are getting the cover you need.
  • Better match your circumstances to your level of insurance. If your circumstances have changed, it could be possible to renegotiate your level of cover with your insurer. For example, with car insurance, there are many people who continue to work from home, which means they might not need their car for their usual commute. Some insurers consider where the car is parked when calculating what premiums will cost. If your car stays at home, in the safety of your garage, that could mean you may qualify for a reduction. If that’s not the case, it could pay to compare the cost of your policy with other providers that do offer that type of customisation.
  • Look for loyalty discounts (and check that they are worth it in the first place). Taking out different kinds of insurance policies with the one insurer could sometimes make you eligible for a “multi-policy” discount. But it could also pay to check to see if that discount is actually worth it, by comparing what other providers could offer you for the same cover.
  • Consider changing your excess. Some insurers will allow you to change your excess, so you pay less in premiums but pay more towards the cost of repairs or replacement whenever you make a claim. However, it could be a good idea to consider your ability to pay that excess if other unexpected expenses arise at the same time.

Compare car insurance

If you’re considering car insurance policies, the comparison table below displays some of the policies currently available on Canstar’s database with links direct to the providers’ websites, for a 30-39 year old male seeking comprehensive cover in NSW without cover for an extra driver under 25. Please note the table is sorted by Star Rating (highest to lowest) followed by provider name (alphabetical). Use Canstar’s car insurance comparison selector to view a wider range of policies.

Compare home insurance

If you’re comparing home and contents insurance policies, the comparison table below displays some of the policies currently available on Canstar’s database with links direct to the providers’ websites, for an Australian aged under 50, seeking cover in NSW or ACT for a cost to replace building and contents of below $550,000. Please note the table is sorted by Star Rating (highest to lowest), followed by provider name (alphabetical). Use Canstar’s home insurance comparison selector to view a wider range of policies.

5. Review your super: Are you paying too much in fees?

Recent volatility in the share market may have had an impact on some Australians’ super balances. Investment performance is a key factor to consider when determining how your super is tracking, but another important factor to look at is fees. If you’re looking to protect your nest egg at a time of uncertainty (or rebuild it if you have withdrawn super due to financial hardship), making sure you’re not paying too much in fees could help.

Super fees are often shown as a percentage of your balance, and as a result, what may look like a small difference in the fees you’re charged per year, could potentially translate to tens of thousands of dollars of retirement funds saved or lost by the time you’re eligible to draw down your super. You can compare super funds with Canstar based on various factors, including fees.

If you’re comparing Superannuation funds, the comparison table below displays some of the products currently available on Canstar’s database for Australians aged 30-39 with a balance of up to $55,000, sorted by Star Rating (highest to lowest), followed by company name (alphabetical). Use Canstar’s superannuation comparison selector to view a wider range of super funds.

Fee, performance and asset allocation information sho