Financial experts have valued what you should reduce to combat the pressures of the cost of living, and the tips may surprise you.
Cost of living pressures continue to rise for many Australian families, but experts have revealed how you can start saving money right away and reducing your debt.
HPH Solutions financial planner Matt Hern told NCA NewsWire that the first thing to remove was “forgettable amenities.”
“It simply came to our notice then. Forget-me-nots include candy with morning coffee, takeaway meals or at least reduced takeaway home delivery, ”he said.
“Instead of having multiple streaming services at once, subscribe and consume 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 to check how often they go out to restaurants and use food delivery services, such as Uber Eats,” he said.
“Meal planning, sticking to a shopping list, cooking and eating in bulk could easily save a couple at least $ 200 a week.
“Consider replacing more expensive fitness passes with cheaper alternatives or free outdoor workouts, limit the use of air conditioners and heaters, and turn off any devices that aren’t used often, as they are expected to energy costs are rising “.
CBM Mortgages’ Craig McDonald has seen Australians begin to worry about rising rates over the past two months. He told NewsCorp that the first thing people are giving up to combat the pressures of the cost of living is eating out.
The broker, based in the eastern suburbs of Sydney, said: “Customers are aware of how banks control their daily spending, so Grandpa’s toast and $ 5 coffee week is the first thing to go out “.
Edith Cowan University financial planner and professor Damon Brown told NCA NewsWire that entertainment and travel were the main expenses people would incur if they were having financial difficulties.
“Especially travel that involves driving based on fuel costs. The five-hour drive to a campsite and stuff like that, just because the cost of fuel has skyrocketed, ”he said.
“What used to be a cheap holiday … has become considerably more expensive.”
Brown also agreed that food delivery services should be discarded for anyone trying to save money.
“This is a discretionary element that can be reduced. 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 that you have to have. I placed the order just two nights ago and it cost me $ 80 … it’s mental, it just adds up.
Mr. Hern warned that having all his money in one account made it too easy to spend too much.
“Limit your likelihood of impulsively overspending by automatically reserving money in a separate account for each payment to cover your commitments, such as bills and essentials,” he said.
“Also set up automatic savings for your goals and additional debt repayments. Surplus amounts can be spent on incentives and indulgences.
“Eliminate the urge to spend impulsively by unsubscribing from marketing newsletters and avoid browsing stores without a definite list and budget.”
Mr. Lee agreed to have a separate account was a good idea and said it was important for people to set a budget.
“Record your weekly income, add up your expenses, and calculate how much you have left over, if any, to see if that’s enough to meet your annual savings goals. If not, adjust your budget and review your expenses, “he said.
“Transfer your budgeted weekly savings to another account to avoid spending.
“Pay your credit card in full each month to avoid interest charges or do not use credit cards at all to avoid getting caught in a debt trap.”
Hern said reducing spending could be a confrontation, so people should start with quick and easy steps.
“Look at your account direct debits and trim subscriptions that you no longer use,” he said.
“Then switch to low – cost versions of your current spending habits.
“For example, bring lunch to work instead of shopping, and socialize with friends at home with homemade snacks instead of dinner.
“Use public transportation or car sharing if possible, and refuel your car at the lowest point of the fuel cycle.”
Lee said he would recommend that anyone with a loan talk to a financial broker.
“It’s usually your biggest expense, so it makes sense to review your loan structure and interest rate,” he said.
“Most people pay at least $ 0.50 a year more than they should and with a $ 600,000 home loan, which equates to $ 250 a month in interest savings just by reviewing your loans. for housing.
“Major banks expect the Reserve Bank of Australia to raise interest rates by at least 1% by the end of the year.
“For the average home loan balance, this equates to a minimum increase of $ 500 a month in your mortgage payments. Be prepared and budget.”
Mr. Lee noted that banks competed hard for business and paid to buy.
“Some banks are paying a discount of up to $ 6,000 so that you can refinance your loan, subject to certain terms and conditions, which could be an additional bonus to interest savings,” he said.
Brown agreed that mortgage holders should review their mortgages.
“Is it still competitive in the market? Because we often find that if we are stuck in products that are a few years old … there are better products on the market, ”he said.
Brown also recommended paying off credit card debt.
“We’re going to see credit card interest rates rise considerably more than what only Reserve Bank prices raise,” he said.
Brown said if people felt under financial pressure, they should feel comfortable talking about it.
“Talk about it with family and friends. Don’t feel embarrassed because there are so many people who are under financial pressure,” he said.
“Historically … for boomers, everything was very confidential and they never talked to friends and family if they were under financial pressure.
“I think now we are in a new era where financial pressures are really common and there is no judgment.”
Mr Brown said it could save you from having to go out with friends and family when you can’t afford it.
“Or if your employer wants to give you more opportunities to work from home so you don’t have to incur the costs of driving to work and things like that,” he said.