Cost of living increases are crunching Australians’ budgets. Last calendar year, Australians spent $642 billion on general living expenses, according to ASIC’s MoneySmart.
But you can reduce your household expenses – and save thousands – far more painlessly than you might imagine.
If you’re a mortgage holder, it’s worth shopping around for a good deal. Interest rates are low and lenders are hungry for business – several are discounting rates, waiving fees and offering incentives to win new business.
But what matters most when it comes to comparing home loans is not the size of the discount, but rather the rate of interest and fees charged. A 1 percent discount might hook you in, but by shopping around you could potentially find rates that are well below the discounted rate on offer.
If you can find a more suitable home loan option, talk to your lender as they may be more willing to negotiate than you think.
Food and drinks cost us between $10,700 and $14,500 a year, not including alcohol, research shows.
We all have to eat, but grocery shopping and dining out are big expenses that can be easily reduced. There are plenty of ways to cut back on food bills, such as planning meals in advance and only buying what you need so to avoid waste, using a shopping list and shopping smarter.
If you can’t tear yourself away from restaurants, do breakfasts, or look for cafes that do BYO.
Along with housing costs and food, transport is one of the biggest costs in most household budgets.
Cars are one of the biggest wealth suckers on the planet and their values can fall fast. Aside from the initial purchase price, things like petrol, registration, car insurance, parking and servicing all add up. For many of us, there’s the added cost of servicing a personal loan.
Experts recommend opting for second-hand vehicles to avoid the depreciation tax. But you may also find significant savings by shopping around for the best deals on petrol, comprehensive car insurance and your car loan.
Household expenses can quickly add up, especially with the price of electricity. So pay attention to your bills and cut down where you can.
Technology is a big one – most people have separate mobile phone and internet packages and many consistently go over their limits and end up paying hefty fees and over-limit charges. Technology is much cheaper now than it was a few years ago, so shop around for plans that suit your circumstances.
Put your savings to good use
You can potentially save thousands of dollars of each year by taking a good look at your budget. The key is putting those savings to good use.
A scheduled deposit into a high-interest savings account can be a good way to build a savings pool or, if you have a home loan, an offset account may be a more sensible plan. Compare savings rates online at RateCity or for advice talk to a financial planner or your accountant.