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Estimated reading time
7 minIn this article
- How to save on your mortgage
- Ways to save on everyday items
- Savings tips for renters
- Create a budget for your grocery shop
Ah spring – the season of flowers, fruit and more sunshine. The mornings get lighter, the nights get longer and overall, we feel a little brighter.
But with the rising cost of living, it can be easy to feel uncertain. In this article we’ll break down everything you need to know about rising costs, as well as the areas you might be able to save in.
Things you should know about the cost of living (and tips to help you save)
1. Interest rates
If you've got a mortgage, or are thinking about buying a home, chances are you're well aware of the cash rate changes that have occurred so far this year – and their impact on interest rates.
To recap: the Reserve Bank of Australia (RBA) has been steadily increasing the cash rate target during 2022. If you've bought a home this (usually) directly affects the variable rate on an existing home loan, as well as the rate you can lock in on a new variable or fixed loan.
After years of record-low interest rates, for many people this has caused some financial strain.
Tip: Pay your loan off fortnightly (or weekly)
As strange as it might seem, switching to fortnightly or weekly repayments will actually save you money in the long run. This is because there are 12 months in a year – but 26 fortnights, and 52 weeks. In other words, you'll pay up to an extra four weeks a year, which in turn pays off your loan faster. And you'll also save on interest too.
Plus, breaking your payments up into smaller chunks means you'll have less of a lump sum to fork out each month. Remember though to always check your loan terms and conditions, fees and charges, and consider what is best for your circumstances!
2. Inflation
If life in general is feeling a little bit more expensive at the moment, it's probably because inflation (the cost of everyday goods and services) is at the highest it's been since the early 1990s. And it's not forecasted to peak until later in 2022.
The good news: it's then expected to wind back towards the 2% to 3% mark, providing some relief for Australians.
Tip: Save where you can
It may surprise you, but there are worthwhile savings to be made in your everyday expenses. From consolidating your utilities to asking for a better deal on your electricity bill or phone plan – you can often save a few dollars by negotiating with your current supplier. And if they won't budge, shop around and see if you can get a better deal elsewhere.
Other ways to save include cutting unused streaming services, taking advantage of promotions and selling old clothes. Shopping at certain times of the day, such as near closing time when perishable produce is more likely to be on sale, and buying things on special or that are in season are great ways to reduce the impact of rising food costs, too.
3. Rent
For many people, finding a rental in today's market, with record low vacancy rates, can be a challenge. And rising rent costs aren't helping. According to real estate data analytics company CoreLogic, the cost of a typical rental jumped by 3% in Australia's capital cities in the three months to June this year.1 That figure was 2.7% in regional Australia.
Tip: Get a housemate
Moving in with a friend or finding a likeminded person to fill an empty room can reduce the costs of renting, by sharing them. This includes your rent, bills and any other living-related expenses. If you already have a rental but want a housemate, be sure to let your landlord or agent know so their name can go on the lease (and bond) too.
4. Groceries
And whether you're a budget shopper or a brand name buyer, you’ve likely felt the pinch of grocery prices rising. This has been further impacted by recent flooding in Australia, as well as international events which make it more expensive to get our goods. Supply chain disruptions have been felt in every single industry.
Tip: Create a budget
Creating a budget is one of the easiest ways to help keep your money on track, especially as the cost of living (and raspberries) rises. Make a list of all your expenses, including your weekly shop, or use a ready-made budget planning tool. Creating a savings plan can be a good way to ensure you’re prepared for any unexpected costs, too.
So while costs are rising, there are still ways you can save – and every little bit helps.
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