Be smart with your spending.
The increasing cost of goods and services is a reality most Australians have to deal with. It’s certainly not getting any easier to ‘make ends meet.’ Data from the Australian Bureau of Statistics (ABS) shows that living expenses for employee households were up by 2% in September 2018 compared to just a year ago.1
But there’s no need for panic! By being organised and smart with your finances, you could manage rising costs without draining the savings… provided you have any!
1. Cut back on major expenses
Trimming your expenses is one of the easier ways to manage the high cost of living. But rather than taking a piece-meal approach, it may be more effective to cut back on some of the large drains on your earnings, such as food and transport costs. Take those leftovers to work! Compare the costs of major must haves like energy bills and be sure to review insurance expenses. There’s many comparison sites, brokers and advisers who can help you get a better deal or ensure what you have is right for you.
2. Reduce lifestyle costs
It may be worth auditing your lifestyle costs to see if these too could decrease. While you don’t have to give up all the things you enjoy, cutting down on, for example, your overseas holidays or dining out could go a long way in reducing your costs. Maybe instead of a meal out every week, you cut that to fortnightly. Perhaps every second year you go off-shore rather than every year. Check for those cheaper vouchers or groupon deals before heading out to the movies, shows or restaurants.
3. Create a budget
Having a budget and sticking to it may also help you minimise unnecessary expenses. As boring as it sounds, a budget tracks your weekly or monthly spending and may help ensure you have enough money to cover essentials, build up your savings and handle unexpected or increased costs. You may wish to consider working with a professional financial adviser or using software that links with your bank accounts to create a budget that factors in your income, expenses and financial obligations.
Knowing your numbers is vital to staying on top of it all. Being frugal has a whole new lease of life – check out those dedicated to keeping on top of it all online.
4. Supplement your income
Increasing your income may be another way to ride out the rising cost of living. Go ahead and ask for that pay rise! You could take on extra work in your spare time or start a side hustle. Perhaps you could become a private tutor in your field of expertise, rent out your spare room sometimes or pet sit. Even selling old unused clothes, sporting equipment or items no longer needed could assist.
If you have enough savings on top of your contingency fund, you may want to invest to grow your capital and earn interest. Your financial adviser may recommend strategies to help you generate an income from your investments.
The high cost of living may affect your savings and lead to money-related stress. But if you’re smart about your finances, you can still keep your cost of living in check and remain financially secure.