You need a structure for your banking


If the way you bank seems a bit random or haphazard and the accounts you use have just evolved from your very first school banking account there is a good chance you are making things hard for yourself and losing money.

You should have a structure to your banking. Keep the structure as simple as you can. Every account should have a purpose. Make sure you are getting a good deal on every account.

Here is our view of the ideal banking structure for those of us that don’t have a mortgage: 

Ideal banking structure - no mortgage


It might look complicated but it’s pretty simple. You need a Transaction Account that you can have money paid into and pay money out of. These accounts offer a lot of flexibility but usually pay little or no interest. You get paid into this account and then you move money from here into your Savings Account (more on this later) or into your Bills Account (if you have one). If you have no Bills Account you transfer money from your Transaction Account to your Credit Card as required to pay it off. You put any excess cash you have into your Savings Account. You want an account that pays you the highest rate of interest you can find. You’ll probably also want a Credit Card, which if you use sensibly can be a free source of short term credit. Charge all your expenses to your card and then pay off the card each month. If you want some extra discipline set up a Bills account and each time charge something to your credit card transfer enough to pay for it into your Bills account. Alternatively, don’t get a credit card and use a debt card instead.

For those of us that have a mortgage things should be a little different. Here’s our ideal banking structure for someone with a mortgage.

Ideal banking structure - with a mortgage
Notice now that we have an offset account instead of the transaction account and the savings account. Now what we should be doing is being paid into our offset account, charging all of our expenses to our credit card and paying off the credit card in full as required. This approach maximises the balance of the offset account for as long as possible each month and maximises the interest offset on our mortgage account.

About MoneyBrilliant and how we can help

At MoneyBrilliant we believe that when people make better decisions about their money they live better lives. We can help you get your finances sorted, understand your spending, find banking products that will earn you more or cost you less, set savings goals, build a plan to own your home, track important insurance details, get your debt under control and build a retirement plan. MoneyBrilliant Plus customers can also join our money coaching programs. Whatever your starting point, we can help.

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This summary has been prepared by MoneyBrilliant Pty Ltd (AFSL 492711, ACL 493068). The information in this summary is of a factual nature only. We are not suggesting or recommending that you take any particular course of action in relation to any financial product or service. It does not take into account your personal circumstances or objectives. If you need financial advice or taxation advice you should seek advice from a licensed financial adviser or tax agent. You may also be able to access additional information from the websites of the Australian Securities and Investment Commission (ASIC) and the relevant product providers.

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