Cost of living pressures will continue to grow for many Australians, with the RBA lifting interest rates, energy and petrol prices rising and grocery bills skyrocketing.
So where can you find the extra money to help cover the basics? Here’s a few tips from the experts to help your budget’s bottom line.
Assess all of your spending
Most money experts recommend starting with your current outgoings.
Start by looking at where your money is going and write it down.
It’s hard to know how to fix it if you don’t know where your money is actually going.
Start with three categories:
- Must pay, such as rent or mortgage and electricity bills
- Open for negotiation, such as groceries and insurance
- Additional spending, such as takeaway and streaming services
Once you see the hard data on how much you are spending, you can make a call on what you can cut back on.
Stay At Home Mum founder Jody Allen knows the importance of this process all too well.
In 2009 she was made redundant while on maternity leave and pregnant with her second child.
She went on to complete a spending overhaul so her family could cover their mortgage repayments, and it started with her food bill.
How to cut your food costs
Since her financial overhaul, Jody Allen has written multiple books on how people can save money on food with a bit of clever planning.
It might seem hard to believe that you can cut your food bill when food prices are rising at a rapid rate (I’m looking at you lettuce), but Ms Allen said there were still plenty of things people could do to save money at the check-out.
“I like to shop and cook really ‘old fashioned’,” she said.
“I generally only buy what my grandmother would have had available, and I don’t waste a thing.
“When food shopping, try and shop just the outside of the supermarket and avoid the middle aisles if you can.
“All the basics are on the outside.
“Buy meat in bulk packs, shop at your local markets, and make food basic, but fun.”
She said keeping very cheap basics in mind while shopping also helped.
“Rolled oats are huge in my house. We have them for breakfast, I add them to shakes for the boys, they can be used to crumb chicken, and they are cheap,” she said.
“I really like tinned fish like tuna or pink salmon, and chicken on the bone is still reasonably inexpensive.
“During winter I grab the slow-cooker out and use it daily — cooking things low and slow — and then adding all the little bits and pieces that are still good from the fridge to bulk it all out.
“We have it for dinner that night — then jaffles the next night, or on top of a baked potato with cheese the next.”
Ms Allen also suggested growing fruit and vegetables at home if possible to save money down the track.
“I have a fruit orchard with lemons, limes, mandarins, peaches, nectarines and avocados,” she said.
“I try and add a new fruit tree a couple of times per year, but only what we will actually eat.”
Renegotiate your monthly bills
Ms Allen’s next step in cutting back costs for her household was to search for better deals on almost every expense.
“I renegotiated my internet and phone bill,” she said.
“I contacted all of my insurance providers and asked for a better deal or a discount.
“Unfortunately, it doesn’t pay to be loyal, and now I spend a whole day every year shopping around for the very best deal and if I change insurance providers, I usually get some sort of ‘new customer incentive’ such as gift vouchers.
“These go towards birthday or Christmas gifts.”
Now that you have seen exactly where your money is going each month, you can make a call on whether you need every subscription you have.
You might realise you are paying for multiple subscriptions you don’t watch.
If you decide to delete them all, you can replace them with free streaming services such as ABC iview or other free-to-air apps.
Got a gym membership you don’t use? Cancel it and find a no-cost fitness class in your council area, or take advantage of free online videos.
Realise you are spending a big chunk on food delivery services? Delete the app and write up a meal plan.
Assess your mortgage
Mortgage broker Maddie Visser said it was important to look at your existing mortgage to see if you could save money.
“The built-in buffer or floor rate is built into the calculators when assessing your borrowing capacity,” she said.
“This buffer is usually 2.5 per cent more than your home loan rate.
“This also provides some reassurance when rates do rise, that there is room in your budget to be able to meet the repayments.
“Other ways to reduce interest is to store any additional savings in an offset facility.
“Instead of being charged interest on the full loan balance, interest will be charged on the loan balance, minus the balance in the offset account, using the extra money to get ahead in your repayments.
“On the flip side of that, a lot of people have offset facilities but may not necessarily be utilising these to their full advantage, therefore are sometimes being charged a ‘package fee’ or ‘annual fee’ for a product they don’t need.
“Sometimes simply reviewing your product and switching to a ‘base product’ will be a quick way to potentially reduce the interest rate and annual/monthly fees.”
Ms Visser also said cutting up the credit cards was important.
“A lot my clients have credit cards that they don’t use or aren’t using for the right reasons,” she said.
“Closing these credit facilities or reducing the limits will not only remove the temptation to spend, but will also increase their borrowing capacity significantly, as lenders will include the credit limit as an ongoing monthly expense, regardless of whether you use it or not.”
Reach out for help if you need
Many people are already living within their means with little to cut back on.
If you’re finding yourself in this situation, you can reach out to the National Debt Helpline on 1800 007 007 for free financial advice.
In each state and territory you can also access food assistance and rental and crisis accommodation.
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