Household incomes are more than keeping up with the cost of living but the demands of changing lifestyles are adding to our cost of living pressures, according to a new report.
The latest AMP.NATSEM Income and Wealth Report, Prices these days – The cost of living in Australia, found strong growth over the past few decades in the prices of everyday essentials such as power, rent, mortgages and education.
While Australians’ incomes have kept up with the cost of living according to the report, we are spending more on lifestyle, health and recreation, adding to the stress of managing budgets. Education costs have risen 264 per cent since the 1980s, while medical, dental and insurance costs have increased by 560 per cent, 356 per cent and 346 per cent respectively.
But regardless of a household’s income, there are many ways to ease the financial pressure.
Banking and insurance
The median capital city cost of banking and insurance services is $7,532 and while they’re essentials, you can still find savings.
First, look at the fees you are being charged. If internet transactions are cheaper, reassess the way you pay your bills. Try to only use your own institution’s ATMs to avoid paying a fee, or take cash out when you use EFTPOS. If you have several bank accounts and credit cards, consider consolidating them to save on bank fees.
The cost of insurance policies varies greatly. Bundling them can save you more than 10 per cent, while life insurance can be obtained through your super fund – but in all cases, make sure you know what you’re covered for.
Electricity and other utilities can cost families several thousand dollars a year. You can save by adjusting the thermostat on heating and cooling appliances, turning off appliances instead of leaving them on standby and buying equipment with energy-efficient star ratings.
Take advantage of energy companies’ increasing competition by analysing your bills and seeing whether you can find a better deal. Also check to see if you are eligible for a government or council rebate for installing energy or water-efficient equipment.
Groceries and other bills
Food makes up the largest single component of the annual household budget, costing up to $12,200 a year. Planning meals can significantly reduce both costs and wastage, and checking supermarket specials each week can give you ideas for meals using discounted items.
Keep track of petrol prices and fill up the car when prices are at their lowest for the week.
If your family watches a lot of movies and wants to see the latest releases, you could save on cable or satellite TV bills by switching to an online video streaming service.
Alternatively, bundle phone and internet costs. If there are several mobile phones in the household, see whether they can be bundled with your home phone, cable TV or other device.
Make sure your home loan is still the best one for you. Is the interest calculated daily or on an average monthly balance? The former will save you plenty over the long term. Making payments fortnightly or weekly instead of monthly can also result in significant savings.
Consider shopping around for a better rate, taking into account any fees for switching providers or changing to a different type of loan with your existing institution.
If interest rates fall, maintain your repayments at the same level. You can cut months or even years off your loan by paying extra.
By following these tips you can take charge of your household budget and save money without missing out on any of the essentials.
At Blueprint Wealth we offer financial advice that is right for you, no matter what stage of life you are at. Contact us today to set up a plan that is right for you.
*Greg Major is an Authorised Representative of AMP Financial Planning Pty Ltd, ABN 89 051 208 327, AFS Licence No. 232706.
Any advice given is general only and has not taken into account your objectives, financial situation or needs. Because of this, before acting on any advice, you should consult a financial planner to consider how appropriate the advice is to your objectives, financial situation and needs.