Personal finance experts share tips on how to save and budget your money — “You should ditch ‘forgettable comforts’”
- Replies 9
It's no secret that the cost of living is on the rise in Australia. But what may be less well known is how quickly those costs can add up, and how much debt many families are now carrying as a result.
Thankfully, there are some pieces of advice that you can follow to save some money.
Financial planner Matt Hern from HPH Solutions has revealed some easy ways that families can start saving money immediately and reduce their debt burden in the process.
The first step is to cut out what Hern calls "forgettable comforts". These are the small, everyday items that we often take for granted, but which can add up to a lot of money over time.
“You won’t miss them. Forgettable comforts include the sweet treat with your morning coffee, takeaway meals, or at least cut the home-delivery of takeaway,” he said.
“Rather than having multiple streaming services at once, subscribe and binge one service every three months.”
Personal finance experts pointed out that eating out is one of the “forgettable comforts” that we should ditch in order to save money. Credit: NCA NewsWire/Andrew Henshaw.
Finance Quarter director and broker Sean Lee also pointed out that excessive spending on food is one of the major factors that drive up our monthly costs.
He explained: “Some quick wins people can look at to save a bit of money is reviewing how often they go out to restaurants and using food delivery services, such as Uber Eats.”
“Meal planning, sticking to a shopping list, bulk cooking and eating in could easily save a couple at least $200 per week."
“Consider replacing more expensive fitness memberships with cheaper alternatives or free outdoor exercises, limit the use of air conditioners and heaters, and turn off any devices that don’t get used often as energy costs are expected to rise.”
Craig McDonald, from CBM Mortgages, confirmed that the first thing that Australians are ditching is eating out.
He also said that more and more Australians are becoming weary of the increasing rising rates on goods, quipping: “Clients are conscious of how the banks are scrutinising their day to day spending, so the avo on toast and $5 coffees on weekends are the first things to go.”
Australians are becoming weary of the continuous price hikes. Credit: NCA NewsWire/Andrew Henshaw.
Meanwhile, Financial planner and Edith Cowan University lecturer Damon Brown, said that the expenses that struggling Aussies should limit are spendings on entertainment and travel.
“Particularly travel that involves driving based on the fuel costs. The five-hour drive to a camping location and things like that — just because the cost of fuel has just skyrocketed,” he quipped.
“What used to be a cheap holiday... has become considerably more expensive.”
However, Mr Brown also agreed that most unnecessary expenses come from food delivery services, emphasising that anyone trying to save money should refrain from eating out or ordering food online.
He explained: “That’s a discretionary item that can be cut back on. We’ve just got to be better at budgeting food rather than relying on discretionary buys."
“I don’t think it’s a staple item that you need to have. I ordered out just two nights ago and it cost me $80... it’s just mental, it just adds up.”
Mr Hern added that we should have multiple bank accounts, describing that having a single account would "make it easy" for us to overspend.
He quipped: “Limit your likelihood of overspending impulsively by automatically setting aside money in a separate account every pay to cover your commitments, such as bills and essentials.”
“Also set up automatic savings for your goals and extra debt repayments. Amounts left over may be spent on impulses and indulgences."
“Remove temptation to spend impulsively by unsubscribing from marketing newsletters, and avoid browsing the shops without a list and a set budget.”
Knowing which to prioritise and managing your finances through multiple accounts could help with ovespending. Credit: news.com.au.
Mr Lee backed this advice, emphasising that having a separate account could allow us to prioritise our needs and set up a budget.
“Record your weekly income, add up your expenses and calculate how much you have left over, if any, to see if this is enough to meet your annual saving goals. If not, adjust your budget and review your expenses,” he said.
“Transfer your budgeted weekly savings to another account to avoid spending this.
“Pay your credit card in full every month to avoid interest charges or don’t use credit cards at all to prevent yourself from getting caught in a debt trap.”
While all of this advice can help you save money, the experts warned that immediately cutting all the "unnecessary spending" could cause a shock to most people.
Mr Hern suggested taking "quick and easy" steps instead.
“Look at the direct debits from your account and cut subscriptions you no longer use,” he advised.
“Next, swap to lower cost versions of your current spending habits."
“For example, take your lunch to work rather than buying it, and rather than dining out socialise with friends at home with homemade snacks."
“Use public transport or carpool if possible, and refuel your car at the lowest point in the fuel cycle.”
Those who have a loan should seek advice from a finance broker, according to Mr Lee.
The finance expert said: “This is usually your biggest expense so it makes sense to review your loan structure and interest rate.”
“More often than not people are paying at least 0.50 per cent per annum more than they should be and on a $600,000 home loan — and this equates to $250 per month in interest savings just by reviewing your home loans."
“More often than not people are paying at least 0.50 per cent per annum more than they should be and on a $600,000 home loan — and this equates to $250 per month in interest savings just by reviewing your home loans.
“The major banks are forecasting the Reserve Bank of Australia to increase interest rates by at least one per cent by year end."
“For the average home loan balance, this equates to a minimum $500 per month increase in your mortgage repayments – be prepared and budget for this.”
Mr Lee also claimed that since banks are "competing hard" for business, it makes sense to shop around.
“Some banks are paying a rebate of up to $6000 for you to refinance your loan to them, subject to certain terms and conditions, which could be an added bonus to the interest savings,” he quipped.
Mr Brown urged mortgage holders to review their mortgages.
He recommended: “Is it still competitive in the market? Because often we find that if we’re stuck in products that are a few years old ... there are better products on the market.”
Mr Brown added that you should pay down credit card debt.
“We’re going to see credit card interest rates increase considerably more than what just the Reserve Bank increase in prices,” he said.
People who are burdened with financial pressures should be more comfortable talking about them with family and friends. Credit: news.com.au.
Finally, Mr Brown urged people who are experiencing financial pressures to talk about their stress with their family and loved ones.
He suggested: “Speak to family and friends about it. Don’t feel embarrassed about it because there’s a lot of people that are under financial pressure."
“Historically ... for the boomers, it was all very confidential and they never spoke to friends and family if they were under financial pressure."
“I think we’re in a new age now where financial pressures are really common and there’s no judgement.”
So, there you have it, folks! For more money-saving tips, we recommend checking out the Money Saving Hacks page of the SDC website!
Do you have other pieces of advice for those who are looking to cut on their spending? Share them with us in the comments below!
.png){kind=icon}
