The financial squeeze is well, and truly on, as rising interest rates, skyrocketing fuel prices and climbing food costs all take their toll.
Few will be immune to the pinch, with new NAB research finding many Australians are making big changes to their spending behaviours due to the rising cost of living:
- One in two are switching to cheaper brands or actively looking for more affordable products
- Four in ten have either cancelled or cut back spending on food delivery services and entertainment
- One in four have cut back or cancelled gym, sports, or club memberships
With this in mind, here are four more smart tips for saving money during these challenging times.
1. Review your expenses and set a budget
The first step to saving money is to list all your monthly expenses, such as mortgage loan repayments, groceries, transport and fuel. This gives you a clear picture of your spending habits and will help you identify where you can spend less on unnecessary purchases.
Pay particular attention to memberships, subscriptions and streaming services, as there may be a few you no longer use. This can add up to a surprisingly large sum, with research finding the average monthly spend on unused subscriptions is $40.66 – or almost $500 per year.
2. Go incognito when searching the web
One of the best ways to cut unnecessary spending is to put temptation out of reach. Using incognito mode when browsing prevents your search history and surfing habits from being stored.
How does this save you money? Well, Google won’t know what you’ve been looking at – so you won’t receive any tempting, targeted adverts. And because no one else can see what you’ve viewed on the internet, the price of high-value items such as flight tickets won’t increase the more you search for them.
3. Beat the loyalty tax and shop around for better deals
From your broadband to your home loan, energy bills and insurance premiums, shopping around for a better deal is one of the best ways of saving money. That’s because illogical as it may seem, existing customers often pay more than new customers, thanks to something known as the ‘loyalty tax’.
The difference isn’t pocket change either. Take home finance as an example.
The ACCC, the competition watchdog, found in its home loan price inquiry that “many Australians with older home loans paid significantly higher interest rates than borrowers with newer home loans”. Over the life of the loan, this difference added up to tens of thousands of dollars.
4. Get ahead of rate rises by refinancing onto a lower rate
Sadly, it’s all but guaranteed that the Reserve Bank of Australia will continue to lift the country’s official interest rate as it tries to curb soaring inflation. Many lenders will pass on these rate hikes in full to their variable-rate home loan customers. This, in turn, will cause your home mortgage repayments to rise.
You can offset some of these future increases by refinancing onto a lower rate (if your circumstances allow) – as this will let you start from the lowest base possible. A good mortgage broker can help you crunch the numbers and find the best deal for your individual circumstances.
Want to get ahead of rate rises? NMC Finance is an experienced home loan mortgage broker and can help you refinance. Contact Nathan Coad on 0498 766 639 or firstname.lastname@example.org to find out more.