With the latest inflation figures showing a 5.1 per cent increase over the past 12 months; along with an interest rate rise and surging petrol prices, there has never been a better time to tighten the money belt.
Early childhood teacher and blogger Elizabeth Mitchell said the recent inflations have definitely made her budget more.
“That's not to say I don't splurge now and then, but I’m buying less takeaway food and buying grocery items on clearance. I walk to the shops instead of driving and carry my groceries in a backpack to save petrol.”
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The single mother uses cashback programs, vouchers and is teaching her son about budgeting.
“It’s important to keep good habits for the months ahead. When I received my car insurance bill instead of just paying it, I compared prices, and then called my insurance company for a better deal, to which they gave me a $60 reduction.”
To prevent any financial stress she is cooking more meals at home and regularly audits all bills and asks for better deals. Mitchell buys second hand clothes and limits her kids' extracurriculars to save money.
“I flip items and sell other peoples items too. I have made thousands doing this. With groceries, I use Flybuys and supermarket programs. I find free ways to exercise, like bushwalking, bike riding and kicking a ball with the kids.”
And Sloan Wilkins from Executive Financial Coaching, said with the recent interest hike is the number one concern for his clients.
“Even those who aren’t finding it tough yet, are concerned about the impact of interest rate rises on their budget and stress levels and lifestyles. Will they be able to support their kids with extracurricular activities, or be forced to cut back?”
The other areas of stress are other debts, such as car loans, credit cards, personal loans and buy-now pay-later schemes.
“Income is the greatest wealth creation tool, but a person cannot build wealth if it all goes out the door in debt payments. One has to meet minimum payments along with a plan to get these debts paid off; using a budget helps you win.”
Another concern are petrol and energy prices. “This is really on everyone’s mind – how can we cut back and can we get a better deal?”
Embrace the budget mentality
Wilkins urges people to become more budget positive.
“A budget puts you in control; it delivers freedom to spend on the important items; as soon as you start to budget you can begin to feel financial stress ease.”
An avid budgeter himself, Wilkins said that his default position is to have an emergency fund in place which covers six months of his family expenses.
He and his wife have weekly budget meetings.
“Even though we’ve worked hard to build a level of financial security. It’s great for our kids to see us planning together and talking about finances without starting a money fight.”
Although the couple have a fixed home loan they have adopted higher home loan payments based on the rates in the market.
“This will help us to increase how far ahead we are on the loan and be ready for the new higher repayments that will kick in when it comes off the fixed rate in a few years’ time.”
Recession proof budget tips from the experts
Sloan offers the following recession proof budget tips to start today.
1. First up is to be clear on how much you have coming in and going out. It can be scary to look at first but it's essential to get it down on paper (or app).
2. Review your subscriptions and memberships; cancel everything that you are not using. Another tip for streaming services is to choose only one for a three month period - then binge like crazy before moving onto the next one. You'll save a lot.
3. Plan your weekend travel to save on fuel. Don't take the car out just on a whim. If you're heading to the kids sport, then do the groceries on the way home.
4. Plan evening meals for the week ahead and then shop to that plan. Sometimes people shop purely out of habit, so try 'shopping your pantry' which means creating meals using what you already have on hand.
5. Tackle big bills. Use a comparison site to get a better electricity, gas, internet, phone and private health insurance deal.
6. Get active to spend free time with your family. Heading to the park or a free community event doesn't cost anything.
Making the right saving and spending choices for your budget gets easier as you go along. You'll soon find yourself in the groove.
Certified financial planner Sheila Cabacungan and community radio show host on SWR 99.9FM Money Maven, has five money money saving tips to set you off on the right track.
7. Move back to physical cash
“I am going back to using physical cash notes and coins rather than tapping away. I’ve always saved all of my coins and over the course of a year, the most I’ve managed to save is $1,500. This year I’ve been putting all my $2 in a plastic water bottle.”
She said this tip is a great discussion point for her radio audience.
“I ask them how much they think is in the bottle as a way of illustrating how easy it can be to build a cash buffer. So far I’m half way through the bottle!”
8. Sell everything in your home, wardrobe, garage that you have not used in over a year.
9. Go on a spending ban and eliminate all discretionary shopping on non essentials.
10. Meal plan with the seasons so that you eliminate food waste while making sure you eat well.
11. Swap, rent and barter before you buy anything non essential.