What is saving money?

Saving money in Australia is the practice of setting aside a portion of income for future spending, emergencies, or investment goals. Australian household savings rates have varied widely over the past two decades, peaking at more than 23 per cent during the 2020 COVID-19 lockdowns when spending opportunities were limited, and falling to about 1.2 per cent in 2024 as cost-of-living pressures absorbed extra income.

Common saving goals include building an emergency fund (typically three to six months of essential expenses), saving for a home deposit (usually 10 to 20 per cent of the property price), saving for a holiday or major purchase, and contributing to children's education expenses. Many Australians also make voluntary contributions to their superannuation as a long-term savings strategy, attracted by the 15 per cent concessional tax rate on super contributions and earnings within the fund.

Several specific savings products are available. High-interest savings accounts at most banks offer ongoing rates with conditions (such as depositing a minimum amount each month and not withdrawing). Term deposits lock funds in for a fixed period (one month to five years) at a guaranteed rate. The First Home Super Saver Scheme allows first-time home buyers to make voluntary super contributions of up to 15,000 dollars per year (capped at 50,000 dollars total) and withdraw them, plus deemed earnings, to use as a home deposit, with significant tax advantages over saving in a regular bank account.

Several federal government programmes encourage saving. The Government Co-contribution to Super pays 50 cents on every dollar of after-tax super contributions (up to 500 dollars per year) for low-income earners. The Low Income Super Tax Offset effectively refunds the 15 per cent contributions tax for workers earning under 37,000 dollars. The Spouse Contributions Tax Offset gives a tax rebate of up to 540 dollars for contributing to a low-income partner's super. Money Smart at moneysmart.gov.au publishes calculators for compound interest, savings goals, and home deposit projections.