How to save more as the cost of living rises

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RateCity uncovers the higher costs of living and shows you that it is possible to alleviate the effect on your savings.

May 12, 2010

If our outgoings increase and our wages remain virtually the same, it does not take a mathematician to work out that your savings will be affected. The Australian Bureau of Statistics (ABS) recently released its consumer price index showing alterations in prices for March. It listed eleven major groups of goods and services which contributed to an overall increase of 2.9 percent for the March quarter compared to the same period last year and a rise of 2.1 percent over 2009.

The most dramatic price rises for the March quarter this year compared to the March quarter of 2009 were:

  • Housing up 6.1 percent
  • Education up 5.7 percent
  • Health up 5.1 percent
  • Transportation up 4.1 percent
  • Alcohol and tobacco up 3.5 percent
  • Financial and insurance services up 2.0 percent

Compared to the December 2009 quarter, the ABS found a massive jump in the cost for pharmaceuticals by 13.3 percent in the March quarter, vegetables were also up by 10.3 percent, electricity up by 5.9 percent, petrol by 4.2 percent, deposit and loan facilities 3.4 percent, hospital and medical services by 2.9 percent and house purchases 1.2 percent. No wonder we are finding 2010 a tough year on our wallets!

Your savings don't need to suffer
As the costs of living increases savers will rely more on their savings accounts to help ease the pressure so it is important that they are in order. To assist in lessening the sting of rising costs, here are some tips that may help you get the most out of what savings you do have and help you to save more long-term:

  • Compare online. If you are currently getting a lower rate then perhaps it is time to make the switch and get more for your dollar. By comparing rates online you can make certain you are receiving the best possible interest rate with your savings account. For example currently RateCity's highest rate online savings accounts are ING Direct's Savings Maximiser and Bankwest's TeleNet saver both at 6 percent.
  • Use online comparison sites for other products such as your mortgage or car insurance. You could find yourself with a few hundred dollars extra in your savings account by switching your car insurance premium.
  • Shop smarter and be aware of your options. Look at ways you can save more, for example if your favourite wine or beer increases in price, perhaps buy it in bulk as opposed to per bottle or why not try some cheaper labels, clear skin bottles sell for a couple of dollars each - you might be pleasantly surprised and you will save!

With prices increasing it doesn't mean that you have to cut back on spending altogether, it just means that you need to be more aware and smarter with your choices and look at ways that you can cut back to reduce costs. As a result you will save more and your savings account will be a lot healthier for it.


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