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Published: Sep 15, 2022, 3:30pm
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The cost of living is on the rise in Australia, putting financial pressure on Australians. Here are some easy ways to save money.
The price of everything from groceries, petrol, insurance, renting and purchasing a property has been on the rise for the past year or two, but in recent months, the impact has started to hit home.
Inflation in Australia has hit levels not seen in decades, reaching an annual rate of 6.1% and tipped to pass 7% by the end of the year, prompting the RBA to begin a series of aggressive rate hikes. It is estimated that a person with a mortgage of $800,000 will pay, on average, more than $1000 extra a month in repayments than they did as early as April this year.
A key issue has been the swathe of crises to hit the nation all at once—from the spread of Covid-19 and the impact of lockdowns, the war in Ukraine, the global supply chain crisis, and droughts and floods. This has led to increased prices in the grocery store—who can forget the sight of $10 iceberg lettuce in many cities—and surging fuel prices. The price of fuel is tipped to rise by a further 22 cents-a-litre when the fuel excise cut ends at the end of the month.
As Australians grapple with these higher costs of living right across the country, the nation’s food banks report extraordinary demand as some people wait three hours for food hampers.
The only way to deal with the increasing demand is to look for ways to cut costs, as soon as you can. While getting started can be challenging, the reality is that we all need to cut our spending and save as much as we can.
The first step to saving money is to understand how much you spend, and to understand what is necessary spending, and what isn’t.
That means that every household item needs to be accounted for, so get out your bank statement for the past few months and start separating out your expenditure in a simple spreadsheet.
This data will help you organise your numbers by categories and give you a monthly total. Make sure you’ve included everything, such as annual expenses like insurance and car maintenance, so you can see clearly what you’ve got left at the end of each month.
Next, work out what you can cut out, and where you can reduce your spending. Identify non-essentials, such as dining out, unnecessary subscriptions and other recurring charges that need to be cancelled, and even entertainment costs.
Facing up to the numbers and taking control in this way can be daunting at first but in the end can feel hugely liberating.
If you have several debts, consolidating these in one monthly payment might be a good option for you. This involves rolling over the debts into the one loan so that you can make a single repayment.
Next, look at what you’re paying in bank fees and credit card fees, which can vary significantly between providers, so get out the bank account statements and really understand what your bank is charging you.
There’s a lot to be said for simply calling your bank and asking for a better deal when it comes to these charges.
While you’re at it, call your bank and ask for a discount on your home loan interest rate as well. Start by comparing what you’re paying against other lenders so you’ve got the information at hand to ask for a better deal.
Many banks, in particular, are getting on the frontfoot and calling mortgage holders to offer them a cheaper rate before they have a chance to refinance so take advantage of this desire to keep your business and push for a .5% reduction in your loan (and ask them to waive any fees. They can do this). The key here is to be prepared to walk to another lender if there’s a much better deal on the table that your bank won’t match.
Of course, making sure you pay off your credit card in full is the best way to avoid interest charges.
Also, shop around on your insurance policy to see if you can get a better deal elsewhere, but make sure when comparing policies that you’re comparing apples with apples. A lot of consumers end up paying what is known as a “loyalty tax”, which sees them pay too much on common insurances because they fail to shop around each year and so miss out on lower introductory rates for new customers.
Trimming the fat out of your grocery shop can make a huge difference, with plenty of everyday Australians offering tips on how to reduce your bill as low as $150 a week for a family of four.
Start by planning ahead. Decide what your weekly meals will be, including lunches and snacks, and write a shopping list so you don’t get distracted once you’re in the supermarket.
Look for specials and switch to home brands, and convert over to frozen vegetables for some of the staples, which end up being far cheaper to purchase than fresh. Also look out for local weekly veggie boxes filled with local produce, such as Good & Fugly, which curates a weekly produce box of fruit and vegetables deemed ‘cosmetically unsuitable’ for supermarkets and delivers them direct to consumers in Melbourne and Sydney.
Cutting out some meat from your diet, buying in bulk, hitting up your local farmer’s market and planting a few of the basics in your own garden can also help reduce your weekly food bill. Also, cut down to one grocery shop a week, rather than going in every day.
Running a house can be very expensive over the course of a month, so look for ways to reduce your bills, and electricity consumption.
Only run your washing machine when you’ve got a full load to wash, and use cold water. Also, just heat and cool the room you’re using, rather than the entire home. You can cut costs by simply closing the blinds to block out the morning sun, or by making sure your heat isn’t leaking out the open laundry window.
Turn off your appliances when they aren’t in use, and wait to turn on your dishwasher until just before bed so you’re not paying peak energy costs.
Make sure you are signed up to the cheapest deal possible. The Federal Government offers free tools and resources to help consumers compare plans. As each state is different, they also offer state-specific resources to help you choose the cheapest deal. It may take a few minutes of your time, but can save you hundreds of dollars.
For example, it is estimated that those who used the Victorian Government’s Victorian Energy Compare website were able to save $330 in the first year alone by switching to a cheaper deal.
You can also switch and save in areas other than utilities. From the brand of milk you buy to the hair salon you frequent, there are a range of easy switches that will help you reduce your spending.
For starters, look at the streaming services you’re using, and consider if you could cut them down to one. While you’re at it, decide if you could live without your gym membership and replace that with free classes or if you could instead commit to a regular walk with a friend. What’s more, look to cancel subscriptions that you no longer use, but have forgotten about.
Other ways to switch to cheaper options include stopping all food delivery services, riding your bike instead of taking public transport, holidaying closer to home, taking advantage of discounts or vouchers when eating out and entertaining at home more often.
Work your way through each expense and look for ways to reduce costs. And when you’re tempted by non-essential purchases, wait a few days and see if you still want to make the purchase.
Meal prepping has taken off in Australia, with social media and bloggers offering tips on how to get started. Preparing your meals ahead of time means you can buy in bulk once a week, making mealtime much easier.
If meal prepping isn’t for you, at least commit to using your leftovers and helping to reduce the 7.6 million tonnes of food lost or wasted every year. According to Foodbank, 70% of this food is still perfectly edible.
So, get out the cookbook and look for ways to reimagine your leftovers and turn it into the starting point for tomorrow night’s evening meal, or take it to work the next day for lunch.
Other tips for the kitchen include cleaning out the pantry to make sure that nothing reaches its use by date before you get a chance to use it, buying in bulk to save and also cooking meals like bolognese sauce and pizza bases in larger batches to freeze.
Also, cut out the daily coffee purchases and make your caffeine hit at home or at the office instead, which at $5 a day could save more than $1000 a year.
If you’re in financial trouble, you can access free counselling via The National Debt Hotline on 1800 007 007.
Nina Hendy is an Australian freelance business and finance journalist, regularly writing about personal finance, superannuation, building wealth, investing, saving, banking, financial markets, the economy and property. She worked for three newspapers in two states before accepting a role as a senior journalist on a business magazine. She is a beekeeper and member of her local surf lifesaving club.
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