Livelihood pressures continue to mount for many Australian families, but experts have revealed how to start saving money and reduce your debt immediately.
HPH Solutions financial planner Matt Hern told NCA NewsWire that the first thing to leave out was “forgettable conveniences.”
‘You won’t miss them. Forgetful conveniences include the sweet treat with your morning coffee, takeout, or at least takeout home delivery,” he said.
“Instead of having multiple streaming services at once, subscribe and binge one service every three months.”
Finance Quarter director and broker Sean Lee told NCA NewsWire that people spending money on food was a major factor.
“Some quick wins people can look at to save some money is by looking at how often they go to restaurants and use food delivery services, such as Uber Eats,” he said.
Camera icon Reducing the amount you eat out and using food delivery services are ways to save money. NCA NewsWire/Andrew Henshaw Credit: News Corp Australia
“Meal planning, sticking to a grocery list, cooking in bulk, and eating can save a couple at least $200 a week.
“Consider replacing more expensive fitness memberships with cheaper alternatives or free outdoor exercise, limit air conditioners and heaters, and turn off all devices that are infrequently used as energy costs are expected to rise.”
Craig McDonald of CBM Mortgages has seen Australians start to worry about mounting rate hikes over the past two months. He told NewsCorp that eating out is the first thing people do to combat the cost of living.
The broker, based in Sydney’s eastern suburbs, said: “Clients are aware of how the banks are scrutinizing their day-to-day spending, so the avo on toast and $5 coffee at the weekend are the first things to do. “
Damon Brown, a financial planner and lecturer at Edith Cowan University told NCA NewsWire that entertainment and travel are the top expenses people should drop when struggling financially.
“Especially trips that are driven based on fuel costs. The five-hour drive to a camping site and things like that — just because fuel costs went up,” he said.
“What used to be a cheap holiday… has become considerably more expensive.”
Mr. Brown also agreed that food delivery services should be scrapped for anyone trying to save money.
“That is a discretionary item that can be cut back. We just need to be better at budgeting food rather than relying on discretionary purchases,” he said.
“I don’t think it’s a basic item you should have. I just ordered two nights ago, and it cost me $80… it’s just mental; it just makes sense.”
Camera icon Rising fuel prices increase people’s living costs. NCA NewsWire/Andrew Henshaw Credit: News Corp Australia
Mr. Hern warned that overspending is too easy when you have all your money in one account.
“Limit your chance of impulsively overspending by automatically putting money in a separate account for each payment to cover your obligations, such as bills and supplies,” he said.
“Also, set up automatic savings for your goals and additional debt payments. The remaining amounts can be spent on impulses and indulgences.
“Remove the temptation to spend money impulsively by unsubscribing from marketing newsletters and avoid browsing the stores without a list and a fixed budget.”
Mr. Lee agreed that a separate account was a good idea and said it was important for people to set a budget.
“Calculate your weekly income, add up your expenses, and calculate how much you may have left to see if it’s enough to meet your annual savings goals. If not, adjust your budget and watch your spending,” he said.
“Transfer your budgeted weekly savings to another account to avoid spending it.
“Pay your credit card in full each month to avoid interest charges, or don’t use credit cards to avoid falling into a debt trap.”
Camera IconExperts agree that it’s too easy to overspend when you have all your money in one account. Credit: istock
Mr. Hern said cutting spending can be confronting, so people should start with quick and easy steps.
“Look at your account collections and stop with subscriptions you no longer use,” he said.
Then switch to cheaper versions of your current spending habits.
“For example, take your lunch to work instead of buying it, and instead of eating out, chat with friends at home over homemade snacks.
“If possible, use public transit or carpool and refuel your car at the lowest point in the fuel cycle.”
Mr. Lee recommends that anyone with a loan talk to a financial broker.
“This is usually your biggest expense, so it makes sense to review your loan structure and interest rate,” he said.
“Often people pay at least 0.50 percent more per year than they should and on a $600,000 mortgage — and this equates to $250 per month in interest savings just from reviewing your home loans.
Camera icon The rising costs of fuel and groceries and interest rate hikes make it more difficult for people to meet their mortgage payments. NCA NewsWire/Sarah Marshall Credit: News Corp Australia
“The major banks predict that the Reserve Bank of Australia will raise interest rates by at least one percent by the end of the year.
“For the average home loan balance, this equates to a minimum of $500 per month increase in your mortgage payments — be prepared and budget for this.”
Mr. Lee noted that banks competed hard to do business, and it paid off to shop around.
“Some banks will pay you a discount of up to $6,000 to refinance your loan to them, under certain conditions, which could be an added bonus to the interest savings,” he said.
Mr. Brown agreed that mortgage holders should review their mortgages.
“Is it still competitive in the market? Because we often find that if we’re stuck with products that are a few years old…there are better products on the market,” he said.
Mr. Brown also recommended paying off credit card debt.
“We’re going to see credit card interest rates rise significantly more than just the Reserve Bank raises prices,” he said.
Camera Icon mortgage holders are urgently requested to review their mortgages. Credit: News Regional Media
Mr. Brown said if people were financially under pressure, they should feel comfortable talking about it.
“Talk about it with family and friends. Don’t be ashamed of it because many people are under financial pressure,” he said.
“Historically… for the boomers, it was all very confidential, and they never spoke to friends and family when they were under financial pressure.
“I think we are now in a new era where financial pressures are common, and there is no judgment.”
Mr. Brown said it could save you from going out with friends and family if you couldn’t afford it.
“Or if your employer wants to allow you to work from home more so that you don’t have to pay the cost of driving to work and stuff like that,” he says.