With the growing cost-of-living pressures in Australia wallets are getting squeezed but there are some very simple ways to keep a bit more money in yours than what is going out. To get started you’re going to need to do a financial audit on yourself. Sounds scary right? Well, think of it as preparing yourself for a pay rise.
In his book “The Barefoot Investor: The Only Money Guide You’ll Ever Need,” Author Scott Pape recommends monthly financial check-ins as a crucial part of your financial strategy. Key steps include designating a specific day for this task, reviewing bank statements for accuracy, allocating funds to different accounts, assessing progress toward financial goals, updating your budget as needed, planning for upcoming expenses, and celebrating financial achievements.
Remember, its not all about cutting out costs and losing the things that make you happy in life. It’s about knowing where you are and making smart micro decisions or simple changes that will compound to help you get where you want to be. Yes, cutting discretionary spending is one way to save but another more appealing approach is to evaluate your household expenses that may appear ‘fixed.’ Here are five household hacks that are typically the most effective for saving without thinking too much about it.
Household Hack 1: Clever Grocery Shopping
Managing your food budget is essential since the rising cost of food is a major contributor to Australia’s inflation rate. Consider these savvy shopping tips to reduce your grocery expenses:
- Buy seasonal produce, as it is usually more affordable.
- Shop later at night when daily discounts on fruits and vegetables may be available.
- Utilize unit pricing to compare the cost of products by weight, volume, or quantity. This helps you spot real savings and avoid “fake sales” on smaller packages.
- Plan your meals and ingredients, then shop online so you only buy what you need – not those extra 50 items that looked good at the time.
Household Hack 2: Fuel Efficiency and Savings
Petrol costs can have a significant impact on your budget. Combat rising petrol prices and supply issues with these strategies:
- Identify and plan to refill at the cheapest petrol stations in your area.
- Monitor your city’s petrol price cycle using resources like the Australian Competition and Consumer Commission’s website.
- Save on fuel consumption by driving more conservatively, minimizing air conditioning use, and removing unnecessary heavy items from your vehicle.
Household Hack 3: Insurance Savings
Review your insurance policies to potentially lower your premiums without compromising coverage:
- Ensure that any new insurance product offers the same level of protection.
- Check if your general insurance policies (e.g., home, contents, vehicle) are still suitable for your needs.
- Consider adjusting your income protection insurance waiting period to reduce premiums.
Household Hack 4: Medicare Levy Surcharge Strategy
Starting from 1 July 2023, individuals earning $93,000 and couples with a combined income of $186,000 or more may face a Medicare Levy Surcharge. To mitigate this:
- Explore private health insurance options using the government’s independent resource, Privatehealth.gov.au.
- Evaluate the potential cost savings compared to the surcharge and public healthcare expenses.
Household Hack 5: Smart Mortgage Management
Refinancing has increased significantly as interest rates have risen, with a total of $226 billion worth of loans refinanced by Australians in the 12 months from May 2022, when the hike cycle began, to April 2023.
Borrowers are seeking to ensure they are on the best-value deal. Once again, ‘value’ for money is the key: cheap and cheerful could – ultimately – end up expensive and, well, sad.
Check in with your mortgage broker to get some complimentary advice on how to best manage your home loan. It might be that a refinance is the right more to reduce your monthly spend, especially if you are coming off a fixed rate onto a much higher rate.
Once your loan is sorted, make sure you are optimising your mortgage in the best possible way. Chiefly, if you have savings, consider whether these are best housed in a standalone savings account or in an offset account alongside your home loan. The interest you make in the savings account will likely be lower than your mortgage interest rate – and from the former, you will also lose tax.
Keeping money in an offset account can reduce not just your mortgage interest but also your time in debt.
Reevaluate just a few aspects of your finances this month and you may reveal significant opportunities to save.
Next Steps
The best place to start is to record your monthly spending by category over a few months to identify where you are spending the most of your income – you may well be surprised. Many banking apps will do this for you. Take the time to look at the numbers and then make informed changes.