SmartyPig An Online Savings Account For Australia's Generation Y

At time of publishing the interest rate that SmartyPig accounts pay is an extremely competitive 4.5 per cent which is paid once a quarter with no fees. The idea behind the account is relatively simple. Individuals set savings goals with a specific purchase decision in mind, which can be as little as $500 for a Blue Ray DVD player, or $5000 for a holiday to Bali.

The savings decision is purely up to the individual with the minimum amount being $250. Once the information is supplied to SmartyPig, it will then calculate the exact amount the individual needs to save each month to reach their goal and deduct the amount automatically from the individual's current account, with the individual being able to track their own progress.

The most unique feature of SmartyPig is its web 2.0 compatibility. Individuals can make their savings goals public through social networking sites such as Facebook and MySpace, and if family or friends want to contribute to the goal, they can either do so through SmartyPig or through the social networking sites themselves.

SmartyPig also allows savings to be converted in gift certificates of leading retailers such as David Jones, Virgin Blue Holidays and Bunnings. Savings converted into gift certificates get a value boost of anywhere between 4 to 8 per cent.

SmartyPig is an attractive way to start teaching children the value of savings. To open an account one needs to be over 16, but parents wanting to teach their children how to save can open an account in their own name.

Co-founder Jon Gaskell said the technology would improve the spending habits of young Australians, who have a "buy now, pay later" attitude. "Because of the viral and social nature of it we see kids getting involved," he said.

"We need to rethink how we use credit cards. We need to be socially responsible with finances more than ever. Generation Y are plugged in 24/7. It is the new nuclear family, and we want you to take up saving before you buy into the social space."

SmartyPig's deposits are managed by ANZ but customers of any other bank can sign up.