How much money should you have saved at your age?

A handy guide is Canstar’s 2020 Consumer Pulse Report, which shows the average savings (excluding super) across various age groups:

• Gen Z (aged 18-25): $10,000
• Millennials (26-40): $10,000
• Gen X (41-55): $16,000
• Baby Boomers (56-74): $30,000 

If you have more tucked away, that’s great. If your savings are a little lean for your age, a  few simple strategies can get things moving.

Know where your money goes

It's not what you earn that counts – it's what you spend. That’s why it’s so important to follow a budget, and this is one area where apps make it easy. There are plenty of budgeting apps to help manage your cash flow. 

Frollo for example, allows you to use all your various financial accounts – banking, savings, superannuation, investments, loyalty points – on a single dashboard so you know where you stand, rather than having to sign in to multiple apps or websites to get the info. You can also use it to set financial goals and track your budget. Other apps to check out include Pocketbook and WeMoney.

Set a savings target

With a budget sorted, you’ll have a good idea of how much you can afford to tuck away each pay day. Put savings on autopilot by setting up a transfer of cash out of your everyday account and into a savings account. Or drip-feed savings into investments on a regular basis.

Unlock hidden savings

Turbo-charge your savings by shopping around for a better deal. It’s a fair bet you could pocket big savings on your home loan, insurance and utility bills.

Sure, it can call for a bit of effort. But consider this. The average rate on an established home loan is 3.12%, that’s a lot more than the 2.78% average on new loans[1]. Switching a $550,000 loan to a new lender can slash monthly repayments by $100. There’s an extra $1,200 in savings each year.

Make savings work harder

Smart saving isn’t just about accumulating money. It also involves making your money work harder.

The Canstar study found almost one in two of us stash spare cash in a savings account, where you’ll be lucky to earn 1% interest. Worse still, 14% of people keep savings in an everyday account earning nothing at all!

While it makes sense to hold some spare cash, it’s worth looking at options with the potential for higher returns, especially if you’re saving for long term goals and you’re comfortable taking on more risk.

I’m a big fan of exchange traded funds (ETFs). They’re very low cost, provide instant diversification and there’s a wide variety to choose from. Or, think about investing directly in quality shares. Over the last year the Aussie sharemarket notched up returns of 30%[2]. Past returns are no guide for the future, but shares and share-based ETFs have a solid history of healthy long term returns.

The bottom line is that you don’t need to worry about how much you ‘should’ have in savings at your age. What matters is that you put a savings plan in place, and take steps to get more from your money – at every age.

Effie Zahos is an independent Director of InvestSMART, money commentator at Canstar.com.au and Channel 9 Today Show.

For more information about how you can save click here: https://www.investsmart.com.au/what-we-offer/wealth-planning