REDUCE WASTAGE

The first point of call is to reduce the amount of food you throw away. Each year we waste about one in five bags of groceries or around $2,500 per household per year.ⁱⁱGood ways to avoid food waste include planning your shop and even creating meal plans for the week ahead. Before you do a shop – have a look at building on what food you already have in the house. The Foodwise website has a planner that lets you enter the ingredients you already have, selects recipes and assembles a shopping list for any extras you may need.

Keep an eye on what’s in the fridge and be aware of use by dates. You can also use your freezer to extend the life of items if they are getting close to the use-by date and you’re unlikely to use them in time.

SEEk out specials

The next step is to reduce the amount you are forking out at the checkout.

While it makes sense to shop around, it can be time-consuming but there are a number of apps you can download to help you easily track down the best deals. Trolley Saver and Half Price compare specials across the major supermarkets and Frugl provides the best bargains at a range of grocery retailers.

It’s also worth looking at retailers like Costco and Aldi who offer cost savings across their brands and products. It’s not just the big retailers though – many smaller discount brands are springing up mimicking the Costco model and charging an annual membership fee to access discounts and special offers so it’s worth keeping your eye out for these.

Shop wisely

Making some tweaks to the way you shop can also trim your grocery spend. One of the classic rules of saving money on your groceries is to never shop on an empty stomach. You’d be surprised how many treats make their way into your trolly when you are famished!

It’s also a good idea to look at the unit price of the items you are buying and consider buying in bulk for cost savings. Also consider substituting fresh produce for tinned or frozen and adjusting your recipes to substitute cheaper produce or cuts of meat. Buying what’s currently in season is usually a good way to save on fruit and veggies.

It’s worth seeing if there are any home brand or plain label alternatives to your usual brands. The home brand of a product is usually very similar to the name brand and is often made by the same manufacturer but retailing for a cheaper price. Your taste buds may not even be able to tell the difference – but your hip pocket will.

While these tweaks might not feel like much when you look at individual products, by the time you fill your trolley they can all add up to significant savings at the checkout.

GRow your own

The price of fresh produce is the main culprit for increases – junk food has only increased 1%, compared to around 5.6% for fruit and veggies.^iii,iv But saving on food costs does not mean living on pizza. Why not grow some of your own produce? You don’t need a huge garden – or even to have a garden – many herbs and leafy greens do very well in pots or even on a sunny spot on a countertop.

There are many ways you can save on your food bill and each tiny change you make will add up at the checkout and over time. Given that food inflation seems to be a trend that’s not going away any time soon – it makes sense to start saving today.

For help staying on track, feel free to get in touch.

Budget for fun

We don’t mean budgeting is necessarily a fun activity (though we’re not judging those who get a kick out of it), but rather that it’s important to create room in your budget for hobbies or small indulgences.

Perhaps it’s for a fancy restaurant meal, that weekend away, a new pair of shoes – whatever it is, set aside a set amount for the nice things in life.

Budgeting for this ahead of time can help prevent a splurge. Just as a restrictive diet can have you heading for the cookie jar, being too strict with your savings can backfire if you feel deprived. Establish a set amount per month allocated to fun to avoid the guilt and stay on track.

Find low-cost entertainment

If you’ve got expensive taste when it comes to entertainment – regular nights out, multiple subscription services, tickets to sporting games and concerts – you may need to pair it back.

That doesn’t mean nights on the couch scrolling Netflix. You just need to think outside the square when it comes to low-cost entertainment.

Going out to dinner with friends can be swapped for cooking for them at home or holding a pot-luck feast. Facebook Marketplace and Gumtree are great for second-hand buys, and you can keep an eye out for discount event tickets in your area.

Fitness-wise you can check to see if there is a parkrun near you; a free 5km community run held each weekend. You can visit an art gallery, museum or botanical gardens for an enjoyable day out for next to nothing.

Source another income stream

While pairing back your expenses is often necessary to save, you can also boost your income. Again, think creatively as to how you can earn more money.

Do you have a particular skillset or talent you can monetise? Whether it’s a hobby or a previous profession, you might be able to drum up business with your side hustle.

This will take up more of your time, so be realistic around how much time you can invest – you don’t want to be burning the candle at both ends in your pursuit of growing your savings.

Then there are passive income streams, such as course creation or investing in the share market. While the term ‘passive income’ sounds appealing, it’s not as simple as getting something from nothing. You will still need to invest your time and effort in establishing and/or maintaining this income stream and it might not be an easy ride.

Reframe your thinking and priorities

Of course, another way to save more is to reframe your thinking and be clear on your priorities.

You may have to forgo your daily coffee from the café, but you’ll be a homeowner sooner if you tighten the financial belt. Rather than seeing saving as a sacrifice, remind yourself what it will give you in return.

Saving will pay off in the long-term, so stay motivated by thinking of your end goal. For help staying on track or to discuss your borrowing capacity, feel free to get in touch.

The best way to deal with uncertain times, is to be on the front foot with your finances and ensure your personal financial situation is as healthy as it can be.

If you are feeling the pinch of higher inflation you’re not alone. The prices of certain goods and services have risen well over and above the official inflation measure, most notably electricity – with the wholesale price surging more than 141 per cent over 12 months, and petrol – increasing by over 32 per cent.i, ii We are also feeling the pain at the shops with food prices also rising and experts suggesting increases could be as much as 10 per cent.iii

So as the cost-of-living increases, how do you manage to boost your savings, save for a home deposit, or pay down the mortgage to get ahead?

Let’s look at some ways you can flex your money management muscles and strengthen your financial situation.

Compare the current rates

You may have noticed that your home loan repayments have probably risen or will rise once your fixed-rate term ends, and you may be understandably nervous about how high they might go.

The most important thing to remember is that when you took out a mortgage, your repayment ability was measured to at least 2-3% above the default product rate (depending on when you took out the loan), with many brokers and lenders stress testing to 5%.

This means that unless your income has dramatically reduced, you are probably still able to service today’s rates, especially since they are rising from an all-time low. But to be sure, let’s start by checking that your current mortgage rate and structure is still the best fit for you.

Get off the couch

The first step is to think about what motivates you to use as your focus, so have a think about your financial goals. Are you wanting to save for a particular purpose like for a home deposit? Or are you at a different stage of your financial life and keen on getting that mortgage down or looking at investing or renovating? Whatever the goal it’s important to identify how much you are wanting to save and your timeframe.

Don’t just think about your goal in cold, hard financial terms – being emotionally connected to your goal, i.e. why this particular goal is important to you, will provide the impetus to get started and to also keep you on track.

Track your expenses

To get off and running, add up your monthly expenses – the more information the better, so include quarterly or annual expenses as well as your discretionary spending which may be a little more difficult to track. As you go through the figures to come up with a total of your spending, see what you can learn from your spending patterns and where you might be able to cut back.

What’s your bottom line?

Analysing how your financial situation is faring is then a matter of taking your income over the course of a month and subtracting your total monthly expenses. Once you have a clear picture of your current financial position, it’s a matter of tweaking your spending and/or your income over a specific time frame to meet your financial goal.

Get a hand with the heavy lifting

Sounds easy but tracking expenses and sticking to an allocated budget can be tough, so why not let an app do some of the heaving lifting for you. There are many options including Beem It, Fudget, and Pocketbook. It’s also worth checking what budgeting features are offered by your bank or financial institution.

There are many and varied approaches to budgeting that you can select from, so find something that works for you. One popular method is to prioritise your savings and ‘pay yourself first’ putting a designated amount of money each month into a separate account. Or you could try the 50/30/20 method which involves splitting your monthly income into three main categories:

• 50% of your income for your needs – food, bills, insurance, transport, rent or mortgage repayments etc
• 30% of your income for your wants – distinguishing between needs and wants isn’t always easy but ‘wants’ are generally the extras that aren’t essential to living and working like travel, entertainment and dining out.
• 20% of your income for saving

Bulking up your savings

Discipline and developing good habits through repetition help you build your strength. Don’t panic if you have a blowout or an unforeseen event throws you off. Just get back to those good habits you are establishing. On that note it can be a good idea to have a contingency in your budget to reward yourself at a certain point or even to deal with a financial emergency.

There is nothing like the feeling of being in control of your finances and working towards a goal that you care about, so take first step to start flexing those financial muscles today.

i https://www.abc.net.au/news/2022-04-29/power-pain-as-bills-tipped-to-rise-40-per-cent-on-surging-prices/101023488

ii https://www.afr.com/technology/uber-drivers-stay-home-and-suffer-as-petrol-prices-bite-20220602-p5aqpp

iii https://www.news.com.au/finance/economy/australian-economy/food-prices-fears-of-10-per-cent-hike-due-to-rising-gas-prices-poor-food-harvests-and-inflation/news-story/4cbf4870017a8ffa7705a58fdc1f3fb1

Compare the current rates

You may have noticed that your home loan repayments have probably risen or will rise once your fixed-rate term ends, and you may be understandably nervous about how high they might go.

The most important thing to remember is that when you took out a mortgage, your repayment ability was measured to at least 2-3% above the default product rate (depending on when you took out the loan), with many brokers and lenders stress testing to 5%.

This means that unless your income has dramatically reduced, you are probably still able to service today’s rates, especially since they are rising from an all-time low. But to be sure, let’s start by checking that your current mortgage rate and structure is still the best fit for you.

Spruce up your mortgage rate

To assess your current mortgage, you first need to compare your interest rate against those currently on offer. This can be trickier than it looks, as mortgage benefits and discounts can differ widely, with your rate depending on the type of mortgage you have as well as your lender.

It is also wise to check your loan type – fixed, variable or mixed – and assess if it is still best for you going forward. We can help ensure you’re comparing apples with apples through our comprehensive data base that includes broker-only and up-coming offers. We can also give you a guide on how much your repayments are likely to rise with different rate rises and on different loan structures. If you are considering refinancing your mortgage, don’t forget that you’ll need to factor in any re-mortgaging costs when deciding if changing your mortgage is worthwhile.

Decluttering your finances

Whether you already have a mortgage or are hoping to buy your first property, you need to look at your whole budget and identify the monthly mortgage repayment level, that will tip you into tightening your financial belt and possibly mortgage stress.

Knowing where you stand and what the future may look like, should help you feel more in control and allow you to plan for the months ahead.

There are a lot of free budget templates online, including this MoneySmart one that makes it easy to include all your expenses. Don’t forget that annual payments like home insurance as well as quarterly utilities may be substantially higher the next time you receive a bill.

Plan ahead

Building a buffer or emergency fund can assist with not only unexpected expenses but provide you with some breathing room should rates continue to increase. Many people are deciding to build a financial buffer by cutting back on their discretionary spending before it’s really necessary, reducing items like TV subscriptions and meal deliveries. And don’t forget that if you’ve got an offset account, maintaining, or building your savings can reduce your monthly interest payments.

If your finances are stretched, you could also consider moving to interest only payments for a time or contacting your lender for a repayment ‘holiday’. Just be aware of how much extra interest you will be accruing. We can let you know what options your lender offers before you apply.

If you’re saving for a deposit or want to buy an investment property, you’ll need to check that you’re still on track for achieving your goals. Changing interest rate rises will impact the amount lenders will offer you, so you may need adjust your expectations as to what you can realistically afford. This includes the price of properties, as they may have gone up or down and you may need to adjust your expectations or timeline.

If you have any questions about managing rising interest rates or want some help giving your mortgage a spring clean, please give us a call.