The cost of living is rising – and it might be a long time before wages catch up or prices stabilise.
The current “headline” inflation rate, or Consumer Price Index, stands at 5.1% according to the Reserve Bank of Australia.
The CPI is formulated by assessing the changing prices of a standard basket of goods such as petrol, food, utilities, clothing, education, insurance, housing, and other discretionary items.
What can be done to cope with the rising cost of living? Here are some tips to help ride out the climbing prices ahead of their eventual ease.
Related articles:
- How to Beat Rising Grocery Bills
- Inflation Tips: How to Save on Your Winter Energy Bills
- Inflation is on the Rise: Here’s How to Prepare Your Finances
Advice for homeowners
Renters and homeowners are feeling the pinch, as the official RBA cash rate has moved 1.25% upward over three consecutive months since May 2022. According to The Guardian, it could place 200,000 more mortgage holders into financial distress.
A recent survey by Savvy showed that 26% of 1,005 respondents, reflecting the demographics of the Australian population, said that mortgage repayments as their most significant cost of living concern; 44% of people spend between $251-$500 on their mortgage.
Though rates seem far away from the rock bottom of 0.1%p.a, if you haven’t refinanced or re-negotiated your home loan rate with your bank in the last couple of years, you should do so now.
Find a lower rate that will save you money in the short-term and lock it in for as long as possible.
Also – financial hardship reporting has changed – so if you have applied for financial hardship variations or deferrals – it will show up as such on your credit report instead of a blank. For more on this, click here.
What you can do as a renter
Now that we’re in winter, many landlords will advertise their vacant properties for cheaper than summer as demand decreases – uni is in full swing, and parents are reluctant to disrupt their child’s education. If you work from home and location isn’t an issue, moving further out into the suburbs can also reduce your rental bill.
Also, don’t be afraid to renegotiate your rent with your landlord – perhaps a longer lease with lower rents. Remember – a vacant property costs your landlord money. If you’re a responsible tenant with good standing, going with what a landlord knows is much more beneficial than rolling the dice with someone new and untested.
You can also research what’s a good salary in Australia to make sure you are being remunerated correctly and can slowly increase your income to keep up with the rising cost of living.
Shop around for utilities
Wholesale electricity prices have risen by 141% since the start of 2022 – and those costs have been passed on to consumers.
According to the Savvy survey, 43% of those surveyed said that they are considering changing energy retailers as they are unhappy with the value for money, with 32% saying they’ve found more competitive rates elsewhere.
If you haven’t changed your utilities provider in at least 12 months, you may be on the “default market offer” or “standing offer” – when other plans from other retailers may be cheaper. You can find all available plans in your state (where applicable) by using the Energy Made Easy site run by the Federal Government – which means it doesn’t favour one retailer over another. You will have to switch to a new plan yourself, though.
Coupled with investing in low-wattage LED lights and turning off “energy vampires” such as TVs on standby with foot switches, It can ease a bit of the pressure of the cost of living.
Shop around for groceries
If you have a local shopping strip or shopping centre, take a notepad (or open the notes app on your phone) and start comparing prices for staples and groceries.
That could mean ditching the duopoly for green grocers on fruit and veg – during a time when lettuce prices rose fivefold, a retailer in Melbourne’s south east suburbs sold lettuces for $4.99 instead of the average $10. Green grocers buy direct from wholesale markets and can pass on savings direct to consumers. The same can be said for butchers (especially in larger markets), fish markets, and so on.
If you really want to save (and have the space) plant your own for only a few dollars and get all sorts of fruit and veg again and again!
Note: the information presented here is general in nature. Consult a financial adviser before refinancing or applying for credit.
