How to cope with the rising cost of everything
With the cost of living in Australia rising so rapidly, we all wish we could head back to the 'good old days', but while turning back the clock is impossible, there are some things you can do to keep those expenses as low as possible.
Remember when life was simple and everything was cheap? No, we don’t either – but we’ve all heard stories about that mythical time when the world was a better place and you could buy anything you wanted for next to nothing! Now some of those stories might have been exaggerated just a little, but there’s no denying that life is getting more expensive – the latest ABS Living Cost Index reports that Australian ‘employee’ households need 4.6 per cent more net income to cover the cost of living – a rise which outstripped the ‘official’ 2.9 per cent CPI increase. All of this pressure is having a serious impact on families: on average an Australian household will have 2.5 times as much debt as it does income, and while the cost of living in Australia keeps going up, our income isn’t necessarily keeping pace.
According to the Suncorp Life Confidence Index, one in four Aussies – including 42 per cent of young families – are not confident that they would be able to cope with further increases to the cost of living, and 68 per cent of young families would struggle badly if they lost their income for just one month. It’s a big worry for a lot of families, but there are things you can do to avoid it. While turning back the clock to take advantage of the famously lower prices everyone enjoyed back in the ‘good ol’ days’ isn’t really an option, you can make big improvements to your financial circumstances by making some simple savings and being prepared for the future.
To keep your family ahead, you need to start with managing your money a little differently, and these basic budgeting tools are a great way to begin!
Solve the money mystery
Australians lose an average of $59 a week – that’s $3,068 a year! – to ‘mystery spending’, and 44 per cent of people say it happens at the supermarket, with spending on social nights coming in a close second at 40 per cent. Keep track of every cent you spend for a week to find out where you’re ‘losing’ money, and then start taking steps to prevent the problem. If you find that impulse spending at the supermarket is your undoing, then take a shopping list with you and only take the amount of cash you have budgeted for your groceries with you – you can’t spend what you don’t have on you! If social spending is making your money disappear, set aside an amount you’re happy to spend and leave your wallet – that means your keycard and credit cards – at home.
Slash your bills
Electricity, water, gas, telephones, internet, cars, insurance … household costs can be huge, but they’re also the easiest to reduce – and you’ll probably find you can do it without missing out on anything. Contact your providers to make sure you’re getting the best deals possible and then find out how to use them to your advantage. The best saving tactics are utilising ‘off peak’ electricity and any included calls in your phone plan. And if you want to really save some big bucks, think about getting rid of that second car – this alone can save you thousands of dollars a year.
Have an emergency response strategy
Take the cash you’ve ‘recovered’ from your budget, put it in a high-interest savings account and commit to adding something to it each week. Aim to build up at least three months’ worth of living expenses in this ‘emergency’ fund so you can be part of the 32 per cent of young families who could breathe easy for a while if something did happen to your family income. While your personal insurances should help you out in the event of illness or injury, there are some situations – such as divorce or redundancy – that they don’t cover, and if you suffer a long-term illness you could need some extra financial support to give you the time you need to recover.
So while we might not be able to control the cost of living, if you’re interested in saving money, tips like these are just what you need. And there are always simple changes we can make to everyday things to make sure we’re getting the most out of our money!
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Tags: cost of living in Australia, saving money tips, money managing, budgeting tools, best saving
Analaura Luna is an author, wealth adviser and founder of Your Family Your Money. Your Family Your Money’s goal is to simplify traditionally complex financial strategies, demystify financial jargon and debunk common financial myths, becoming every family’s first stop for financial advice, information and inspiration.
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