As the Reserve Bank of Australia announces that official interest rates will rise to 0.35%, financial experts are advising savvy Australians where they can “cut the fat” in their household to save a few dollars.
“A lot of Australians haven’t had a pay rise for maybe up to 10 years and with the cost of living rising so quickly, a lot of people are feeling a lot of financial pressure,” said Scott Haywood , The Finance Guru. A topical matter journalist Sam Cucchiara.
Already feeling the pressure, young parents Sophie Bernard and John Collins had to delay their wedding in order to save for their first home.
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“We had to choose between buying a house or planning a wedding, because that’s a luxury we just can’t afford,” Ms Bernard said.
“So we decided that a house was definitely something we needed for our family.”
The couple and their 18-month-old daughter, August, moved in with Ms Bernard’s mother to save money.
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Although they are paying less rent, they said they are still struggling to build a nest egg.
A topical matter called Mr. Haywood to offer some advice.
“It’s like getting your car serviced. Look under the hood, see where you’re spending the money and see where we could make improvements,” Mr Haywood said.
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“We probably spend, it would take almost $100 a month on streaming services. When you add up your Netflix, your Stan, Binge, Spotify, Amazon, Paramount+,” Collins said.
According to comparison site Finder, 88% of Australians subscribe to at least one streaming service.
Finder’s research also revealed that it would cost an average of AU$146.93 per month – or $1,763 per year – to subscribe to all major streaming services including Netflix, Stan, Disney+, Apple TV +, Foxtel Now, Amazon Prime Video, Kayo Sports, Paramount +, Binge, YouTube Premium and Optus Sport.
“In a rising interest rate environment, everyone will be paying more for rent and for their mortgage sooner rather than later,” Haywood said.
“It is therefore worth assessing whether these subscriptions are still worth keeping.”
Mr Haywood also recommended reviewing all direct debits, checking for unused services that might slip up each month.
“I looked at my bank statements and saw $69 coming out of my account from a gym I hadn’t been to in about three years,” Ms. Bernard said.
“I keep forgetting every month, then I look at my bank statement and another $69 comes out.”
Mr Haywood estimated the couple could save up to $20,000 over the next 18 months by taking into account their current living situation, sticking to their budget and making a few cuts.
“My goal would be to: cut your streaming, cut your gym membership,” Mr. Haywood said.
“Look at other ways to save on regular expenses, like your insurance. Continue to maintain your budget as you are.”
Given the current annual inflation rate of 5.1%, Mr Haywood said some Australians might need to think creatively about how to add money to the bank.
“It’s either – earn more income, start looking at your budget and reduce your expenses – or maybe the X-factor is looking at a side hustle to try and add that extra income,” Haywood said.
“Maybe take a class on the side to try and improve some skills that might get you into a job you can do yourself, maybe from home.”
The first step is to see what items around the house you could sell.
“A good start might be to declutter some of the clothes that you might not wear as much as you used to,” Mr. Haywood said.
“That little bit of extra cash could go towards your savings and get you into a house sooner.”
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