Yahoo Finance $700 cost-of-living cash injection Aussies could claim this month
There's several ways you could make a big difference to your monthly budget.
With the cost of living biting hard, consider just what your money buys and how you could be getting the same for less. When times get tough, we all know about the obvious ways to save money.
Stop eating out, turn off appliances, reduce our reliance on the car, and bulk-buy essentials when they’re on sale. However, other savings often go overlooked.
This can be because they’re less obvious or seem more hassle than they’re worth.
But they can add up to hundreds of dollars that you could put on the mortgage, toward the holiday you've been longing for, or to spend a weekend out enjoying yourself.
Let’s shine a spotlight on some of these and crunch the numbers.
Loan refinancing
If you’ve been with the same lender for a while, chances are you’re paying too much.
Shaving 0.3 percentage points off the current average 6.28 per cent variable home loan rate saves $97.02 per month on a $500,000, 30-year loan.
However, you could do even better.
Typically, the higher the loan value and the more equity you have, the better your chances of negotiating a better rate. Or change lenders to one who will.
Consolidating multiple loans into one – especially expensive car or personal loans into your mortgage, which should have a lower rate – can save even more.
Monthly savings: $97.02
Repayment frequency
Paying monthly means you make 12 repayments per year.
However, paying fortnightly isn’t just double – you’ll make 26 repayments per year. That’s because there are 4.5 weeks in most months.
For principal and interest loans, that means paying down the principal faster and reducing the amount of interest charged.
Using the loan from point 1:
Monthly repayments: $2,991.33 x 12 = $35,895.96 per year
Fortnightly repayments: $1,145.06 x 26 = $29,771.56 per year
Yearly difference: $6,124.40
Monthly savings: $510.37
Loyalty taxes
Utility providers and insurers are nicer to new customers than existing ones. It’s often called the “loyalty tax”.
Avoid this tax by not simply accepting a renewal notice or letting monthly debits continue unchecked. Shop around and threaten to leave unless your provider gives you a better deal.
Even a $20 discount on each per year (which may be really conservative!) quickly adds up across home and contents, car, CTP (especially if your household has multiple vehicles) and private health insurance, energy, phone, internet, and other regular expenses.
Monthly savings: $12+
Unused/underused subscriptions
Consider the average cost of some common subscriptions:
Gym membership: $70/month
Pay TV: $60-$90/month
Streaming services: $8-26/month
Magazines – $85/year ($7/month)
Newspapers – $4-$10/week ($17 - $43/month)
Now consider how often you ACTUALLY use them.
Some you might even have forgotten you had – but they’re still draining your bank account.
If you don’t use them, or have duplicates, cancel them.
Monthly savings: $7-$70 each
Vouchers, points and gift cards
Finder revealed Australians have $1.4 billion in unused value on gift cards – that’s worth an average of $198 per person.
Add to that unused discount vouchers and loyalty points from stores, credit cards and frequent flyer miles.
It’s all money we could be using instead of our own.
Monthly savings: $7.92
Unclaimed tax deductions
H&R Block analysis suggests many people under-claim their tax deductions, missing out on an extra $237.44 each year.
Commonly unclaimed, or under-claimed, deductions include work-from-home expenses, self-education, depreciation, undeclared superannuation contributions, and ongoing financial advice costs.
In particular, beware the fixed-rate method for remote working expenses, which may not reflect your true costs.
Monthly savings: $19.79
Holiday habits
Christmas, birthdays, anniversaries, other religious and cultural holidays… celebrations make life fun.
Ways to make them more cost-efficient include:
Having (and stick to) a budget
Avoiding last-minute buys to take advantage of sales
Joining forces with others to buy one larger gift that costs less per person
Secret Santas to buy a single gift instead of one for every family member
Giving gifts from the heart instead of the wallet (quality time, handmade etc.)
Monthly savings: unlimited
Online shopping
Shopping online isn’t just convenient; it can be a real money saver.
There’s less impulse buying, no kids in tow, zero fuel consumption or parking costs, and generally free shipping over a certain amount (supermarkets often have free/discounted timeslots for loyalty customers).
Consider the savings from the weekly grocery shop:
One ice cream/small toy child = $3.60
1L of fuel = ~$1.90
Two fewer impulse buys = $8
Monthly savings: $58.50
Of course, everyone’s spending is different. And the prices used are just averages and estimates.
But if you followed all these savings as described, you’d be better off by AT LEAST $712.60 per month.
Think about what you could do with that!
Helen Baker is a licensed Australian financial adviser and author of On Your Own Two Feet: The Essential Guide to Financial Independence for all Women. Helen is among the 1% of financial planners who hold a master’s degree in the field. Proceeds from book sales are donated to charities supporting disadvantaged women and children. Find out more at www.onyourowntwofeet.com.au
Disclaimer: The information in this article is of a general nature only and does not constitute personal financial or product advice. Any opinions or views expressed are those of the authors and do not represent those of people, institutions or organisations the owner may be associated with in a professional or personal capacity unless explicitly stated.
