There’s no denying that times are feeling financially tougher right now, and everyone Australia-wide is carefully weighing up every spending decision and trying to save money.
To help you save money on household bills, here are four steps you can take to get on top of your finances.
- Look at your spending habits
If you don’t already have a budget, then it’s a good idea to create one or use ASIC’s free one online here. The most effective way to get in control of your money is to find a budget spreadsheet and go through your last year’s bank statements to look at your spending.
This can be a real eye-opener – many of us don’t realise how much money we unconsciously spend.
Looking at your bank and credit card statements can really show you where you can cut back if needed.
Potential savings: $100-$1000+ per month
Negotiate with your current providers, or shop around for a better deal – there are plenty of them out there at the moment.
Picking up the phone is often the most direct way to get a result, but many call centres are over-loaded right now, so sending an email or making contact via the website might be your best bet. You may be able to negotiable a better deal on:
- Electricity and gas – ask what discounts they have for direct debits or paying on time
- Phone and internet packages
- Pay TV subscriptions ie Foxtel
- Mobile phone contracts
- House and contents and/or car insurance
- Health insurance – do you need extras right now?
If your income hasn’t been affected by COVID-19, then the next piece of this puzzle is to bank any savings, where possible. For instance, if you save $100 per month by cancelling your extras cover on your health insurance, set up a direct debit to transfer $100 per month from your pay cheque to a savings account.
This way, you won’t fritter the money away – and you can start building a rainy day fund.
Potential savings: $100-$1000+ per month
- Do you have a car loan, personal loan or other debts?
If you have a mortgage, now is the ideal time to refinance to bundle your loans together and reduce your monthly repayments.
As well as the potential to save a small fortune on mortgage interest, due to the lower interest rates on offer at the moment, you may also want to combine all of your other debts into your home loan. You’ll then have just one repayment each month, instead of juggling multiple debts – and you’ll be paying far less interest, too.
Let’s say your current mortgage repayment is $1800 per month. You also have a car repayment of $600/month (interest rate 6%) and a personal loan of $200/month (interest rate 10%), bringing your total outgoings to $2,600 per month.
If you have equity in your home, you may be able to refinance bundle all of these loans into your home loan. This means you’ll pay a lower mortgage interest rate of between 2.2% and 3.5% on all of these debts – down from 20% on credit cards – and you’ll reduce your monthly repayment.
Potential savings: $100-$1000+ per month
- Streamline your superannuation
If you’ve had more than one job over the years, there’s a decent change you have more than one superannuation account. If this is the case, you’re unnecessarily paying double (or triple – or more!) the fees and charges you need to be paying.
Now, you might be thinking: it’s only a few hundred dollars a year. What does that matter? When you consider the power of compound interest, you realise it matters quite a lot. Just $250 today could be worth almost $5000 in 30 years’ time, based on an average 10% return. Multiple this figure by multiple funds and multiple years, and you’re needlessly robbing yourself blind.
Potential savings: $250+ now; thousands of dollars in future wealth
