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Different ways to save your tax return

Tax time - sometimes it seems to roll around quickly. This could mean good news for many Australians who may be eligible for a tax return.

If you get a tax return and want to save it – either to start a new savings plan or to add to your existing savings - here are some options to consider.

Putting your return into a savings account to start earning interest

Perhaps a straightforward thing to do with your tax return is to put it into a saving account. The benefit of this is you could start earning interest right away. Depending on the account you choose you could open a new savings account online in just a matter of minutes. If you’re not sure how you want to use your tax return, putting it into a savings account could be a good option as you can still access your money when you need it, while still earning interest while you decide.

 

Even if you already have a savings account, it’s worthwhile putting some thought into what type of account is right for you. Some savings accounts will reward you with bonus interest when you meet certain conditions. Take the Westpac Life savings account for example – not only does it pay a competitive base rate, you can also earn bonus interest each month your balance grows. That means even if you dip into your savings during the month, as long as the balance is higher by the end than at the start of the month, you’ll still earn bonus interest.

 

Other savings accounts may offer a bonus introductory rate for a set period of time, such as the Westpac eSaver account.

 

Find out more about Westpac savings accounts

Using your tax return to kick start a savings plan

If you’ve been thinking about starting a savings plan for a while, you could use your tax return as a way to get started. A savings plan is basically a regular savings commitment where you set money aside in a savings account. It’s a good idea to have an idea about what you’re saving for when you start a savings plan – that way it’s easier to stay focussed on why you’re saving.

 

You might be saving for something short term (say, a summer holiday or perhaps you’re putting money aside for Christmas). Maybe you are savingfor something bigger such as a deposit on your first home. Whatever it is, work out how much you’ll need to save and the date you want to save it by. Then you can work out how much you’ll need to be saving on a regular basis to help reach your goal.

 

Find out more about setting up a savings plan

Already have a savings plan? You could give it a boost

Perhaps you already have a savings plan in place. Putting your tax return towards it could help cut down how long you’ll need to keep saving until you reach your goal.

Putting your tax return out of reach in a term deposit

Sometimes the temptation to spend your tax return can be pretty strong. One option you could use to help resist spending it could be putting it into a term deposit.

 

With a term deposit, your money is invested at an agreed interest rate for a fixed period of time (the ‘term’). That means once you’ve put your money into a term deposit, you won’t be able to access it until the end of the term. In return you’ll get a guaranteed rate of interest for the term you select, so you’ll know exactly what the return on your investment will be.

 

The length of a term deposit can be as short as 30 days right through to several years, so you can choose a term that suits your needs. If you’ve got something in mind down the track that you’d like to put your tax return towards (whether it’s short term or long term), putting it into a term deposit with a length to match what you’re working towards could be an ideal option.

 

Let’s say you want to put your tax return aside for Christmas – you could select a term that’ll expire later in the year. Or perhaps you’re saving for a home deposit – if you’ve still got some way to go, you could select a longer-term length (this may also give you access to a bigger range of interest rates to choose from).

 

Find out more about Westpac term deposits

Already have a home loan? Consider putting your return into an offset account

If you have a home loan, you may have the option of having a linked offset account. An offset account is a bank account that’s linked to your home loan. As the name suggests, the balance of any money in the linked account ‘offsets’ the interest in the home loan You may wish to consider putting your tax return into an offset account to help save on interest.

 

 

Things you should know

This information does not take into account your personal circumstances and is general in nature. It is intended as an overview only and it should not be considered as a comprehensive statement on any matter or relied upon as such.