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What are people saving for?

When the desire to save hits the agenda, there are so many different reasons why people put away their hard-earned dollars. Interestingly, generations think differently about money, especially in regards to how seriously they approach financial planning.

Generation Y are found to take their finances seriously from as young as 20, according to the RaboDirect Savings and Debt Barometer 2012. This is likely to result in tracking expenses and forming a budget in order to commence paying off debts and/or saving. In contrast, Baby Boomers tend to emphasise retirement planning.

The study goes on to highlight that 41 per cent of Gen Y today are saving more, with almost half of the generation holding a bleak outlook towards the economy over the next 12 months.

Top 5 reasons why Australians save

1. A house

Whether it’s saving for a down payment or trying to get ahead with the current mortgage, saving for a home is essential for many Australians. The more money you have for a deposit, the greater negotiating power you have when it comes to choosing a mortgage.

Mortgage affordability is also easier, especially if you’re paying down a mortgage faster due to extra repayments. 35 per cent of mortgagers invest savings into mortgage offset accounts, while 35 per cent use everyday transaction accounts, the report found.

2. Education

Bachelor’s degrees are not always viewed as the minimum tertiary qualification, leaving a fraction of mature adults returning to study to complete a master’s degree.

3. Vacation

Those who travel on plastic often come home to mounting credit card debts. Savvy money handlers budget and put money aside to fund their much-needed holidays in advance.

4. Retirement

While it’s not as preferential for younger generations, Baby Boomers view retirement planning with high importance. As such, a significant percentage of savings is invested into retirement planning and superannuation.

5. Emergency funds

Everyone needs cash that is easily accessible should the need arise. And while many people put away funds for tough times or unforeseen expenses, the sad reality is that 46 per cent of working Australians have one month or less of savings to tide them over if they faced job loss. 13 per cent have less than two weeks saved.

What are you saving for? Are you even saving at all?

Regular savers tend to exude higher levels of happiness and health, since they sit more comfortably with their finances and exercise greater control over their financial destiny. By having a savings goal to reach, such as a house or university fees completely paid off, you can begin to build a savings plan that will aid you throughout your life.