Cost of Living: Expert Tips for Financial Relief
Australians are feeling the pinch as living costs soar. From Sydney's pricey rentals to Perth's grocery bills, financial stress is real. But don't worry, mate – we've got the expert tips to help you thrive.
13 min read
Key takeaways
- Knowing the cost of living in your capital city is essential for creating a realistic budget.
- Housing is often the largest expense, so consider options like rentvesting, house sitting, or co-living spaces to reduce costs.
- Cut back on utility bills by using energy-efficient appliances, cooking at home, and re-evaluating yearly renewal costs like car insurance.
- Set aside funds for irregular costs like car maintenance insurances or property taxes.
- Develop a budget that prioritises essential expenses, such as housing and utilities, while also allocating money for savings.
- Explore side hustles, sell unused items, or rent out a spare room to increase your income.
- Managing living costs can be stressful, so it’s important to focus on your physical and mental health. Seek support from friends, family, or professionals, when needed.
G'day, fellow Aussies! It's no secret that the cost of living in our sunburnt country has been rising faster than a kangaroo on a pogo stick. Whether you're in bustling Sydney or laid-back Darwin, chances are you've felt the pinch in your wallet. But don't worry, mate – we're here to help you navigate these choppy financial waters with some expert tips, data-driven insights, and even a few unconventional ideas to keep your finances as healthy as a Tassie devil.
Understanding living costs
Before we dive into the solutions, let's take a good hard look at the situation we're facing. According to the Australian Bureau of Statistics (ABS), the Annual change to the Consumer Price Index (CPI) rose 1.1% as of March 2021 by December 2022, that annual change looked more like an increase peaking at 7.8%. The highest recording not seen since 1990. After reaching a peak in December 2022, the annual inflation rate began to moderate, gradually decreasing to 3.8% by June 2024.
Considering in the last 10 years leading up to 2021, CPI rate had risen 3.0% only once in 2014. Then we've had 13 increases to the CPI over 3.0% since June of 2021. It's no wonder Australian's are feeling the cost of living crisis. But what does this mean for the average Aussie? Let's break it down:
- Housing - The largest contributor to CPI growth, with new dwellings up by 20.7% over the year in September 2022 before tapering off to 5.1% in June 2024.
- Food and non-alcoholic beverages - Up by 9.2% in December 2022, with fruit and vegetables up 8.5% in December 2022.
- Transport - The period of 2021 - 2022 saw the recovery of crude oil, limited global supply and the Russian invasion of Ukraine saw 13.1% increase, driven by higher fuel prices and vehicle purchases.
- Furniture and household equipment - From December 2021 to December 2022, furnishings, household equipment and services increased by 8.4%, reflecting increased costs for home improvements.
- Grocery products - December 2021 and December 2022 also saw bread and cereal products rise annually by 12.2%, Meat and Seafoods 8.2% and Diary and related products increase by 14.9%.
- Utility costs - Over the year leading up to the June 2024 quarter, electricity prices, not accounting for rebates, would have risen by 14.6%. Other utilities costs would have also significantly risen.
It's clear that the cost of living is hitting Australians from all angles since March of 2021 and peaking in December of 2022. It has since moderated lower in many of the groups since. But it has continued to put pressure on everyday Australian's wondering how they would cope any further if it worsens.
Managing housing costs
Rent or mortgage payments
Housing costs of rent or mortgage repayments are often the biggest slice of the expense pie for most Australians, therefore it is important to stay aware of local market housing and rental data to negotiate fair terms. When evaluating housing options, factors like location, size, and amenities play a significant role in determining value. Fortunately, there are various accommodation types available in most major cities, including private rental accommodation, managed student accommodation, student apartments & housing through major university, and local host family options, providing diverse choices to suit different needs and budgets.
Whether you're renting or paying off a mortgage, here are some innovative ways to keep a roof over your head without breaking the bank:
- Rentvesting - This strategy involves renting where you want to live while investing in property in a more affordable area. For example, you could rent in Sydney's trendy Inner West while owning an investment property in regional NSW.
- Tiny houses - Embrace the minimalist lifestyle by considering a tiny house. These compact dwellings can cost as little as $30,000 to build and can significantly reduce your living expenses.
- House sitting - Websites like TrustedHousesitters connect homeowners with house sitters. By taking care of someone's home and pets while they're away, you could potentially live rent-free for extended periods.
- Co-living Spaces - Companies like UKO and HABYT offer co-living spaces in major Australian cities. These often come fully furnished with utilities included, simplifying your living arrangements and potentially reducing costs.
- Granny flats - If you own a property with some extra space, consider building a granny flat. You could rent it out for additional income or use it yourself while renting out the main house.
For those sticking with traditional renting or buying, here's some local property market data:
Median house prices (June 2024)
Capital City | Median Price Per Week |
Sydney | $1,662,448 |
Brisbane | $976,464 |
Melbourne | $1,068,805 |
Perth | $852,240 |
Adelaide | $929,972 |
Hobart | $686,053 |
Darwin | $585,047 |
Remember, these are median prices – there's always room for negotiation and finding hidden gems in the market.
Local market rental data
Australia's rental market is currently facing a significant deceleration in the growth of rental prices, indicating more than just the usual winter slowdown. In many capital cities, the rate of rental increases has either diminished drastically or come to a standstill. Growth in house rentals has notably slowed, with Melbourne and Brisbane. Though some slowing of rental growth is common in the June quarter, the rental market remains challenging for tenants, with vacancy rates across all major cities still below 2%, favouring landlords. Cities like Adelaide and Perth continue to be highly competitive, with vacancy rates as low as 0.5% and 0.6% respectively.
The following CBD market rental data can provide insight into the going rate for housing in the city centre.
Median weekly rent for houses
City | House Median Rent Per Week | Unit Median Rent Per Week |
Brisbane | $630 | $600 |
Hobart | $540 | $460 |
Canberra | $690 | $560 |
Adelaide | $595 | $480 |
Melbourne | $580 | $550 |
Sydney | $750 | $720 |
Perth | $650 | $550 |
Darwin | $660 | $530 |
Source: Domain March 2024 Rental Report
Reducing living expenses
Cutting back on everyday expenses
Now that we've tackled the big ticket item, let's look at ways to trim the fat from your everyday expenses. It's a practical way to save money and lower your living costs. One effective strategy is to reduce utility bills by utilising energy-efficient appliances and remembering to turn off lights when they're not needed. Since utility bills for electricity, gas, and water can accumulate quickly, it's essential to remain vigilant about usage. Additionally, consider ways to trim food expenses, like cooking at home instead of dining out and making bulk purchases to get better deals. By implementing these strategies, you can significantly improve your financial health.
1. Energy costs
All the utility bills, including electricity, gas, and water, can add up quickly.
- Install solar panels - While the upfront cost can be high, the long-term savings are substantial. The average Australian household can save up to $1,000 per year on electricity bills with solar.
- Use smart home technology - Smart thermostats and power strips can reduce your energy consumption by up to 15%.
- Switch to LED bulbs - They use 75% less energy than incandescent bulbs and last 25 times longer.
2. Food expenses
- Grow your own - Even in small spaces, you can grow herbs, lettuce, and tomatoes. A small herb garden can save you up to $100 per year.
- Use food waste apps - Apps like Y Waste connects you with restaurants and cafes selling surplus food at discounted prices.
- Embrace 'ugly' produce - Companies like Odd Bunch deliver imperfect but perfectly edible fruits and vegetables at up to 50% off regular prices, still perfection delicious when preparing own meals and own food.
3. Transportation:
Car-sharing - Services like GoGet and Uber Carshare allow you to rent cars by the hour, potentially saving thousands compared to car ownership.
E-bikes - With the average Australian spending $3,500 per year on transport, switching to an e-bike for short trips could lead to significant savings simply by switching transportation options.
Fuel comparison apps - Use apps like PetrolSpy to find the cheapest fuel prices in your area.
Catching public transport - Traveling in major cities to or from work with the use of public transport and transport links can be more economical than refuelling your car. Many international students are also eligible to get a student concession on public transport making it easier for them to travel around. Don't forget to show your student card when dining and for entertainment as many places offer student discounts and other perks.
4. Entertainment and leisure:
Free community events - Limit the on demand service streaming. Many local councils offer free events, from outdoor cinema to live music and is often the cheapest and easiest way to enjoy free entertainment with many lifestyle benefits.
Library services - Modern libraries offer more than just books – many now lend out everything from power tools to musical instruments, to video games.
Skill swapping - Websites like Skillshare allow you to learn new skills or share your own, often at a fraction of the cost of formal classes.
Managing irregular expenses
Irregular expenses, like car maintenance, car insurance, home and contents insurance or property taxes, can sneak up on you and wreak havoc on your budget if you're not prepared. These less frequent but often substantial costs need a proactive approach to manage effectively. Here's how you can tackle them head-on and ensure they don't catch you off guard.
Plan ahead and set aside funds
One of the most effective strategies for managing irregular expenses is to set aside a portion of your income each month specifically for these costs and common service providers. Think of it as a personal "rainy day" fund. By consistently contributing to this fund, you can build a financial cushion that will soften the blow when these expenses arise. For instance, if you anticipate that your car insurance will cost $1,200 annually, setting aside $100 a month can make that bill much more manageable when it comes due.
Research when it's time to renew
When it's time to renew your home and car insurance, researching quotes can often save you some money. Comparing different providers can help you find the best coverage and cheaper options. Look for quotes that not only focus on premiums but also consider the level of coverage, customer service ratings, and any additional benefits. Online tools and insurance comparison websites make it easier to gather multiple quotes, allowing you to make an informed decision that fits your budget and needs. Remember, a little extra time spent researching can lead to significant savings and better protection for your assets.
- Create a separate savings account - Open a separate savings account dedicated to irregular expenses. This keeps the money out of sight and reduces the temptation to dip into it for everyday purchases.
- Automate savings - Set up an automatic transfer from your main account to your irregular expenses fund. This ensures consistency and reduces the effort needed to save.
- Use budgeting tools - Utilise budgeting apps that allow you to categorise expenses and set goals for different types of spending. Apps like YNAB (You Need a Budget) can help you keep track of your savings and spending.
- Regular maintenance checks - For car maintenance, adhere to a regular check-up schedule. Preventive maintenance can often catch issues early, reducing the risk of more costly repairs down the line.
- Negotiate and shop around - Don't hesitate to negotiate prices for services or shop around for better deals. Whether it's a mechanic or property manager, comparing prices and asking for discounts can lead to significant savings.
- Plan for property fees - Property fees and taxes can be a hefty annual expense. Council rates, land taxes, owner corporation fees are all subject to price increases every year and can incur overdue fees if they are not paid on time. Mark the due dates on your calendar to avoid late fees.
By planning ahead, setting aside a portion of your income, and researching local purchasing power, you can manage irregular expenses without disrupting your financial stability. These strategies can help you stay on top of your finances and ensure that unexpected costs don't derail your budget.
Creating a budget
Make a money plan
Now that we've covered ways to reduce expenses, let's talk about creating a budget that can weather any storm. Creating a budget is a powerful way to manage your finances when the cost of living is high and it can help alleviate stress. By utilising a cost of living calculator or similar tool, you can accurately estimate your expenses and develop a comprehensive money plan that aligns with your income and financial goals. It's important to prioritise essential expenses, like rent or mortgage payments, while also ensuring you allocate funds for savings.
Here's a step-by-step guide:
1. Track your spending:
Use apps like Pocketbook or MoneyBrilliant to automatically categorise your spending. Aim to track for at least a month to get a clear picture.
2. Categorise your expenses:
A. Essential - Rent/mortgage, utilities, groceries, transport
B. Important but flexible - Phone plan, internet, insurance
C. Non-essential - Entertainment, dining out, subscriptions
3. Use the 50/30/20 rule:
- 50% of your income for needs
- 30% for wants
- 20% for savings and debt repayment
4. Plan for irregular expenses:
Create a sinking fund for expenses like car registration or home repairs. Set aside a small amount each payday to cover these costs when they arise.
5. Automate your savings:
Set up automatic transfers to your savings account on payday. What you don't see, you won't spend!
6. Review and adjust regularly:
Life changes, and so should your budget. Review it every three months and make adjustments as needed.
Managing debt and credit
Financial counselling and debt management
Managing debt and credit can be overwhelming, especially during times of high costs of living. If you find yourself struggling with debt or credit issues, it's important to seek help and resources that can assist you in managing your finances effectively. One option is financial counselling, where a professional can provide guidance on budgeting, debt repayment, and managing expenses. You can also reach out to the National Debt Helpline for valuable resources and support.
Additionally, consider utilising a debt repayment plan or credit counselling service to help you get back on track. These services can assist you in creating a manageable payment plan and negotiating with creditors on your behalf.
Here are some strategies to get you back on track:
1. Debt snowball vs. debt avalanche:
Snowball - Pay off the smallest debt first for quick wins.
Avalanche - Focus on the highest interest debt to save more in the long run.
2. Debt consolidation:
Consider a personal loan or balance transfer credit card to consolidate high-interest debts into a single, lower-interest payment.
3. Negotiate with creditors:
Many creditors are willing to lower interest rates or set up a payment plan if you're struggling. It never hurts to ask!
4. Seek professional help:
The National Debt Helpline (1800 007 007) offers free financial counselling. Don't be shy about reaching out – they're there to help.
Boosting your income: Think outside the 9-to-5
While cutting expenses is crucial, increasing your income can give you more financial breathing room. In today's tough economic climate, finding ways to boost your income is key to managing rising living costs. One effective strategy is to explore side hustles or freelance opportunities that match your skills and interests, allowing you to earn extra cash without a full-time commitment.
You might also consider monetising a hobby, like crafting or writing, by selling your products online or offering services locally. Networking can also lead to unexpected job opportunities or collaborations. Being proactive and resourceful in seeking additional income streams can help you handle financial pressures and enhance your overall financial well-being.
Here are some ideas:
1. Side hustles:
Freelancing - Websites like Airtasker and Freelancer.com connect you with short-term gigs.
Rent out your parking space - Apps like Parkhound allow you to rent out your unused parking space.
Pet sitting - Platforms like Mad Paws connect pet owners with sitters.
2. Sell unused items:
The second-hand economy in Australia is worth over $46 billion. Use platforms like Gumtree or Facebook Marketplace to sell items you no longer need.
3. Cashback and rewards:
Use cashback sites like Cashrewards or ShopBack when shopping online. Some Aussies earn hundreds of dollars a year this way.
4. Upskill:
Invest in your skills to increase your earning potential. Websites like OpenUniversities offer free online courses from Australian universities.
5. Rent out a room:
If you have a spare room, consider becoming an Airbnb host or taking in a long-term boarder.
Emotional support and wellbeing
Managing living costs can affect your emotions and overall wellbeing physically and mentally. It's important to recognise the value of emotional support during these challenging times. Leaning on friends and family can provide a comforting outlet for your feelings, while discussing your experiences with a mental health professional can offer valuable coping strategies.
Make time for self-care by engaging in activities that nurture your physical and mental health. Whether it's through exercise, meditation, or pursuing hobbies you love, taking care of yourself helps build resilience. Remember, seeking support and focusing on your wellbeing are important steps especially when you feel like you are losing control of the high cost of living expenses.
Here are some tips:
1. Practice mindfulness - Apps like Smiling Mind offer free guided meditations to help reduce stress.
2. Exercise - Take advantage of Australia's beautiful outdoors with free activities like beach walks or bush hikes.
3. Connect with Others - Join local community groups or sports clubs. Social connection is vital for mental wellbeing.
4. Seek Support - If you're feeling overwhelmed, don't hesitate to reach out to support services like Lifeline (13 11 14) or Beyond Blue (1300 22 4636).
Conclusion: Thriving in Challenging Times
Managing the cost of living in Australia might seem tougher than wrestling a croc right now, but with some clever strategies and a bit of Aussie ingenuity, you can not only survive but thrive. Remember, financial wellness is a journey, not a destination. Stay informed, be proactive, and don't be afraid to think outside the box.
By understanding your expenses, creating a solid budget, reducing costs creatively, managing debt wisely, and boosting your income, you're well on your way to financial stability. And most importantly, don't forget to take care of yourself along the way.
So, chin up, Australia! With these tips in your toolkit, you're ready to tackle whatever financial challenges come your way. After all, if we can handle some of the harshest pandemic lockdown restrictions in the world, we can certainly handle a rising cost of living. Here's to smart saving, savvy spending, and a future as bright as a summer day at Bondi Beach!
Additional resources
Don't forget that there are government resources available to help Australians manage their finances:
- Centrelink - Offers various payments and services to eligible Australians.
- MoneySmart - ASIC's financial guidance website offers free tools and resources.
- Energy Made Easy - A government website to help you compare electricity and gas plans.
- Services Australia - Provides information on government payments and services.
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