There has never been a more pertinent time than now to review your finances.
The rising cost of living has become a key concern for Australians all across the country, with high inflation and back-to-back interest rate hikes already impacting households.
And many are tightening their purse strings and making changes to help.
Here are seven popular ways that these everyday Aussies are cutting back to help fight rising costs.
1. Start with the little things
For Kate Reynolds, small changes have resulted in big savings.
Her saving hacks started with using loads of blankets to save on heating costs and book swaps with friends.
“I read a lot, so I was spending a lot on books. Now I share them with other friends and use the library,” she said.
“I also light candles in the house to give the illusion of heat and warmth. I swear by it. And it makes the house feel nice and cosy.”
For holidays she and her husband have opted for camping. “Initially, it was expensive to get all the gear, but now we have it all; our camping holidays are cheap – we just need food, fuel and firewood. You can pick up lots of camping stuff second-hand.”
“I’ve learnt to weave so I can make wall hangings as gifts for friends and family, rather than splashing out loads of cash.
2. Walk, bike or use public transport instead of a car
In addition to saving on heating costs, sharing books and taking up camping, Reynolds has also implemented a 30 minute walking rule.
“If it takes 30 minutes, I’ll walk. It’s great exercise and saves on fuel and public transport costs.”
3. Coffee cutbacks
When Jaimie Abbott and her husband Matt tallied the cost of coffees they’d spent over the past year, they were gobsmacked.
“We were buying a takeaway coffee each – twice a day. When we reviewed our budget across the year we had actually spent over $7,000 on coffee,” said the mother of two.
Concerned about the rising rates and the effects on their variable rate mortgage, they decided to buy a high end coffee machine and cut-out take-aways.
“We spent $1,400 on a coffee machine and we now have all our coffee at home. I also bought a coffee warmer, which keeps coffee warm for hours. I fill this up before I leave home for work,” she said.
In two months, the couple have already made back the cost of the machine in savings.
4. Rethink your meals
For non perishable goods, you can buy in bulk to save, such as, nappies, toilet paper etc.
Reynolds said she plans all meals for the week and does a big shop to make sure the fridge is stocked, so they don’t reach for take-out.
Linda Tran and her partner said they have saved around 60 per cent of their food bills by cooking at home.
“This can save a tonne of money [rather than it being] wasted on take-aways. And I’ve learnt the fun skills of cooking. My partner and I have saved so much.”
Similarly, Abbott bought a $20 slow cooker to make their cooking easier, cheaper and just as delicious as a takeaway meal.
“We hardly ever get take-aways anymore. As much as we love take away, our slow cooker has been amazing and we’ve made delicious slow cooked lamb, brisket and chicken curries,” she said.
With food prices surging – cooking at home is a popular cutback.
5. Regularly review your cash flow
At just 27 years old, Tran owns three properties so understands the importance of keeping on top of her repayments and finances.
Her number one tip for fighting the cost of living is to regularly review cash flow.
“Take out your notebook, app or spreadsheet and calculate what’s on your plate. I normally review my cash flows every quarter, then adjust and reallocate my funds accordingly to suit my expenses,” she said.
Tran also likes to pay off her small debts first – she doesn’t own a credit card but does have a HECS loan, which she is prioritising to pay off first.
“The indexation rate for HECS loans has risen to a whopping 3.9 per cent for 2022, compared to last year at 0.6 per cent.”
“No one likes a lurking debt that seems to never go away,” she said.
6. Shop around for a better rate
As part of Tran’s regular cash flow review she also reviews her home loan.
“It’s really helpful, given the stark lifts in interest rates recently. Shop around; I’m in the midst of negotiating a better deal with various banks.”
Greg Mawer FCPA and director of Accumulate Accountants agrees that anyone with a mortgage should shop around for a better deal.
“The loyalty tax is real – it’s the cost of being lazy. I find it strange that people are happy to wait in line for 20 minutes to save $10 on petrol, but they won’t invest a few hours to potentially save tens of thousands on their mortgage.”
And, if you have savings, now is also a good time to shop around.
“There are high savings accounts offering rates in the low three percentage range and term deposits in the fours.”
The concept of shopping around for a better price can also be extended to everyday items.
The same goods can have very different prices at different stores so it always pays to look around online and save.
7. Take up a side hustle
A side hustle helps fight back against the rising cost of living too.
Tran has started dabbling in shares to build her portfolio. “Why live below your means when you can expand them? Look for a side hustle, something you enjoy.”