One of the most underrated secrets to financial success

One of the most underrated secrets to financial success often gets ignored because, well, it’s just not that sexy. It’s a savings account. And it can be the secret to earning more, starting to invest, and even just feeling happier about your finances. By Frances Cook.

In a cost-of-living crunch, yes, it can feel impossible to get ahead with your savings. But putting even $20 a week into an account you don’t touch could improve your mental health, and give you the space to make other money shifts that can be game changers. That $20 a week builds up to $1000 in less than a year, creating a good fund to protect you from life’s curveballs.

The knowledge you have a safety net means less stress, and guess what happens when you feel less stressed? You stop avoiding your money. Which means you often create other money wins too, like paying off debt, or learning to invest, because the mere thought of it no longer makes you feel stressed.

It can also help you start earning more. (And let’s be honest, everything about money gets easier if you’ve got more coming in the door.) But how?

Plenty of the tactics that help you earn more also have an element of risk attached – and a savings account helps neutralise some of that risk.

Want to start a side hustle? Ideally it won’t cost you too much to get started, but there’s usually some cost involved, even if it’s small. You also might not make money from it straight away. A savings account gives you breathing space to test out your idea, and find the best version of it.

That side hustle could eventually turn into your own business. But it’s all unlikely to happen without the first step; a savings cushion.

But ok, maybe you don’t want a side job. Maybe you're just going to go for a promotion, or a higher earning job with a new company. These moves still have an element of risk to them, and many of us are hardwired to avoid making changes if we’re not sure whether the new opportunity will pay off.

Guess what gives more peace of mind, to allow you to take calculated career risks? A savings account.

A 2020 study from the National Bureau of Economic Research backs this up, showing that people with savings often risk applying for new jobs and higher positions, or even switching industries entirely.

A full career change is one of the riskiest moves of all, as you may not know who the good employers are, or if you’ll have the skills to succeed once you’re in the door. A financial cushion gives you the possibility of testing it out.

Tash Invests, otherwise known as Natasha Etschmann, is one of those who used financial stability to help her make a major career change. She’s now one of Australia’s most well-known financial educators, with a best-selling book (How Not to Work Forever) and social media accounts with hundreds of thousands of followers.

But she was working in healthcare when she accidentally found a following as she shared her own money journey on TikTok and Instagram.

Etschmann says it took just a couple of years to realise she had a clear choice: Stay in healthcare, or take the leap into starting her own business as a financial educator. By her own admission, it wasn’t an easy choice. She liked her original job.

But she felt that the opportunity to start her own business might not come along twice. Etschmann got the necessary financial qualifications to become an authorised representative, and decided to take the leap into entrepreneur life, as a self-employed financial educator.

You guessed it. Etschmann had been saving and investing hard throughout her early 20s. She purposely went after the healthcare jobs that had long hours, and bigger paychecks to match, and then saved and invested aggressively.

The savings meant that when she needed money to gain the qualifications to provide financial education in Australia, she had the cash on hand.

She also had a few months where she could survive without an income and dive into the business, without having to turn a profit on day one. If the business didn’t work out, she wouldn’t end up homeless, but would instead have the time to apply for new jobs.

This is the core of what having a savings account provides: the freedom to take risks without the constant anxiety of financial instability.

Whether it’s trying for a promotion, launching a startup, or investing in a passion project, that financial cushion allows you to swing for the fences without the paralysing fear of failure, and what that could do to your family.

The savings don’t have to be huge at first. A small percentage of your income each week, in the form of an autopayment from your salary, into a savings account you don’t touch.

As the peace of mind increases, you can then look for other ways to boost your financial health, if that’s what you want.

But it all starts with a savings account.

Information in this column is general in nature and should not be taken as individual financial advice.