Navigating the high cost of living in Australia
In this article we look at some of the ways you can better manage the high cost of living by investing, increasing your income or reducing expenses.
Key takeaways
- Investing a portion of your income is one way you can keep up with a high cost of living.
- Shopping around for the best deals on your home loan, electricity and insurance, can end up saving you hundreds of dollars over the long-term.
- You can find an extra source of income outside of your 9-to-5 job by earning passive income or renting out your garage space, for example.
With the bare essentials becoming – well, expensive, it’s not surprising that many people are looking for new ways to save money or increase their income.
The good news is there are steps you can take to manage a higher cost of living and stay on top of your bills.
Managing a higher cost of living
Here are three ways that could help you better manage a higher cost of living.
#1 Continue investing
Investing a portion of your income is one way you can keep up with, or even outpace, a higher cost of living.
While changes to interest rates or sharemarkets may cause many people to second guess themselves when making investment decisions, it’s important to stay focused on your long-term goals and avoid being influenced by short-term market volatility.
Having a diversified investment plan – money invested across many asset classes and in many industries – will help to cushion you from major sharemarket falls.
If you’re new to investing, it’s a good idea to consult with a financial adviser who can provide guidance based on your circumstances and specific goals. Regularly review your investment portfolio to ensure it remains on track and make adjustments as needed.
#2 Find ways to reduce expenses
Reducing your expenses doesn’t mean sacrificing quality of life. It involves making intentional choices, such as cooking at home or exploring cost effective leisure activities. Small changes can significantly impact your overall financial health.
Shopping around for the best deals on your home loan, electricity and insurance, can end up saving you hundreds of dollars over the long-term. You may also want to consider cutting down on subscriptions or memberships you don’t use, and make sure you’re getting all the concessions you’re entitled to such as rebates or pensioner discounts.
Home loans
One of the simplest ways to reduce mortgage debt beyond paying more than the minimum repayment, is to review your home loan.
Many mortgage lenders are competing for new business so it’s worth checking if your interest rate and features are still competitive. Switching to another mortgage lender may get you a better rate – helping you to pay off your mortgage faster.
Insurance
Regularly assess your insurance policies to ensure you’re adequately covered without overpaying. Bundling policies or shopping around for better rates can lead to substantial savings.
Electricity
Consider using some of these energy saving tips:
- Check out government and council rebates to reduce your energy bill
- Switch to energy efficient lightbulbs
- Consider installing solar panels: while costly initially, this can save thousands of dollars over the long-term
- Water savings: install a water efficient showerhead and only run the dishwasher on a full load
- Only heat and cool the rooms you’re using and use a timer
- Unplug unused electronics
- Hang-dry your laundry rather than using a dryer.
Groceries
While food might be a necessary expense, there are ways to save without compromising quality.
Meal planning is a simple way to get better at grocery shopping to reduce wasting food. You could also consider finding recipes that use the same ingredients as you’re more likely to use up an entire bag of vegetables or a fresh bunch of coriander.
Alternatively, consider growing your own vegetables.
#3 Increase your income
Although there isn’t always a quick or easy way to increase your income, there are options for earning extra cash to cover more immediate expenses.
You can find an extra source of income outside of your 9-to-5 job by:
- renting out a room or parking space
- pet sitting
- dog walking
- online tutoring
- or explore a side hustle such as market research.
You may also want to consider investigating avenues for earning passive income to earn money without actively working. This could include investments in shares, real estate or starting an online business. While building passive income takes time, it can become a valuable asset in beating the high cost of living.
Lastly, while it may not be easy to increase your pay overnight, you could consider ways to use your job performance to get a salary increase if you can prove you’ve gone above and beyond.
Keep an eye on the job market and be open to exploring new opportunities. Sometimes, switching jobs can result in a substantial salary increase. And always invest in your skills and education to make yourself more marketable.
Summary
The high cost of living in Australia may seem daunting, but with strategic planning and informed decision making, it’s possible to achieve financial stability. Remember, it’s not about how much you make but how well you manage what you have.
Source: MLC
