How to make the most of lockdown gains


It’s no secret that COVID-19 lockdowns have impacted our ability to spend money. From cancelled holidays to postponed weddings and events, the strict limits on going out and about has helped many people build their savings pot with minimal effort.

According to a recent survey from the Australian Bureau of Statistics (ABS)1, one in four (26%) Australians expected their household income to increase over the next 12 months. If you find yourself in this situation because spending is down, or you have already managed to squirrel some money away, read on for one way to boost your savings that might meet your needs.

All cashed up and nowhere to go

For us Aussies, there’s still no fixed date on when we’ll be allowed to fly outside of this country (and at this point in time, certain states!) – Coronavirus has seriously clipped our wings.

In 2018-19, more Australians went overseas than ever before. ABS data2 shows 11.2 million short-term overseas trips were taken, most of them (57%) by holidaymakers.

Whilst some hopeful jet setters have struggled with refunds for cancelled itineraries, for those that have been provided full or partial refunds from travel agents, airlines and holiday companies, this could mean extra cash in the bank with no imminent travel opportunities on the horizon to transfer it to.

Lock away your gains

For those who have been able to carry on working through the coronavirus lockdowns, this may have been your first opportunity to start accumulating some savings. If you have spent the last year building up savings and don’t want to blow it all, a good approach is putting some of it out of the way of temptation.

One option to consider for this is a term deposit.

A term deposit is an investment of cash placed with a financial institution for a fixed period of time, usually between one month and five years. It offers you a fixed interest rate for your return when the term matures, and is a low-risk, safe savings option that is easy to set up and simple to understand.

The power of guaranteed returns with fixed terms can offer welcome stability in what has been a relatively unstable period! Not many other investment options (such as shares for example) offer this certainty, so it is definitely worth considering to make the most of your hard earned savings.

Placing your vacation cash in a term deposit means that you will not only know exactly how much interest you will be earning, but you will also benefit from the highest levels of regulatory protection3. Deposit holders are backed to the value of $250,000 per account holder per ADI (authorised deposit taking institutions), making it an attractive savings option.

Give yourself more spending money!

After 18 months of snap lockdowns, border closures, and social distancing, unfortunately, COVID-19 won’t be leaving our global community any time soon, which also potentially means our borders aren’t going to open any time soon either.

We could choose to dwell on this, or we could seize the opportunity to lock our cash away in an out of sight, out of mind savings option that gives us maximum bang for our buck. You don’t even need to reinvest the lump sum on travel or events – it’s your money to do with as you please. You may choose to top up your super, start that renovation, or put a deposit down on an investment property – the world is your oyster!

Admittedly, term deposits may not be quite as fun as travelling around the world, experiencing a new culture or eating the exotic local cuisine with a cold beverage in hand, but they do set you up to have more money in your pocket for when international travel does resume!

At Woolworths Team Bank, if you already have a savings account with us, you can easily redirect funds into a term deposit account for maximum returns. Our current term deposit rates (as of July 2021) are outperforming our savings account rates, so it’s definitely worth considering if you want to give yourself more spending money for when you can go on holidays for day trips, massages, shopping sprees or perhaps that hot air balloon experience you’ve always wanted to do!

You might choose to start with a 12-month term to see how the world responds to travelling and vaccinations, or you might decide to wait it out for two years to build your rainy day fund and reap the rewards when the term matures.

Optimise your returns and make the most of your hard-earned money today by speaking to one of our friendly and experienced team members today.

General Advice Warning

This advice has been prepared without taking into account your objectives, financial situation or needs. Please consider the appropriateness of the advice in light of your own objectives, financial situation or needs, before you follow the advice.

Sources

  1. Household Impacts of Covid-19 Survey, Australian Bureau of Statistics [website], https://www.abs.gov.au/statistics/people/people-and-communities/household-impacts-covid-19-survey/latest-release#income-and-savings (accessed 20 July 2021).
  2. Overseas Arrivals and Departures, Australian Bureau of Statistics [website] https://www.abs.gov.au/statistics/industry/tourism-and-transport/overseas-arrivals-and-departures-australia (accessed 20th July)
  3. About the Financial Claims Scheme, APRA [website] https://www.apra.gov.au/about-financial-claims-scheme, (accessed 20th July 2021).

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