Banks pay almost nothing on savings while lending your money at much higher rates. Instead, direct your salary into your home loan to cut interest costs and build equity faster, making your money work for you rather than the bank.
So we've all been taught from everyone that you bank your salary into a savings account. When money sits in a savings account or a check account, whatever you want to call that, it doesn't work for you. It's working for the bank. So when you're banking $5,000 of salary for the month into your savings account, I'm not too sure if you know what the banks pay you in interest. It's around.01% for a transactional savings account. So that's.01%, not 1%, not 0.1%. It's 10% of 0.1%. What do you think the banks do with that money once it's in a savings account? They invest it in lending it out to the other customers. So you put five grand into your savings account, you get five cents per year in interest, thank you very much, bank. And then the bank invests that with Mary on her 16% credit card, or Tom with his 10% car loan. So imagine you're getting money for free, 0.01%, and then making 16% off that money. That's an unbelievable business model. And that's exactly what's happening with your money. Every single time you put into a savings account, the bank is lending that money out to other customers at 16%, 10%, and even worse, they're lending it back to you for your mortgage at 4% or 5%. So you want your income working for you. And the whole secret to wealth is actually changing the flow of your cash. At the moment you're banking to a savings account, paying the mortgage. What I've found works best for me and my thousands of clients around the country is getting my salary and banking that into the home loan and then paying the savings account. So just by reversing the flow of the money, all of a sudden I've got my money working for me, because that money sitting in my home loan account is saving me interest. If that's saving me interest at 5%, that's exactly the same mathematically as me putting my salary into a term deposit, paying me 5%. But the best part about investing in debt is there's no tax on those earnings. If I put that salary into a term deposit at 5% after tax, it would be probably close to 3.5%, because if I put that salary into my mortgage and that's saving me 5%, it's 5% net. It's exactly the same as me receiving a 5% net return after tax of money in a term deposit there. So reverse the flow of your money. Get your money working for you, not the bank. And by simply doing that, you're going to enhance your debt reduction. You're going to pay down your home loan. You're going to build equity faster and move forward. You're going to be finally making financial progress there. No one's telling you this. Have you ever thought, why not?
