How to prepare for and manage the rising cost of living

It’s not sexy, but crunching your household’s numbers can give you a much better idea of where your money comes from, where it’s going, and whether you may be able to make some changes.

There are many ways to make a budget, from marking every expense in a different colour highlighter, to sorting your money into metaphorical buckets (literal buckets may be harder to manage). Explore a few options until you find one that’s right for you.

There may be more affordable alternatives to some of the major expenses in your household budget that you simply haven’t yet considered. This could include your:

• Home loan
• Car loan
• Credit card
• Home insurance policy
• Car insurance policy
• Energy plan
• Phone and internet plan

Consider comparing the available choices and if you come across something more affordable that could also meet your needs, consider making the switch. Either you’ll end up somewhere more affordable, or your current provider may offer a discount to keep you as a customer.

You could also consider switching the brands you buy when you go shopping, or even switching supermarkets altogether.

A range of apps and services are available that could help you better manage your saving and spending. For example, your bank’s phone banking app could offer spend tracking, or you may choose to use an online budgeting service.

It’s often sensible to keep an eye out for discounts and other bargains when you’re out shopping. But you may also be eligible for other rewards and benefits that could help you out. For example, your credit card’s rewards program could offer discounts at some shops.

Also, some state and territory governments may offer vouchers or relief packages for citizens doing it tough, such as toll rebates.

The longer you owe money, the more you’ll pay in interest and fees. This money may be put to better use elsewhere.

If your budget allows it, consider paying off your personal loans, car loans or credit cards so you can stop making repayments and paying interest. Once you’ve made these payments, you can try to avoid getting back into debt again – you could you’re your credit card in a bottom drawer for emergencies only, or even cut it up and cancel it altogether.

If you have multiple loans or credit cards to pay off, you could consider using a debt consolidation personal loan or balance transfer credit card to help make this debt a bit more manageable. You could also consider refinancing your home loan and consolidating the debt into the mortgage. Just keep in mind that these options could risk extending the time you’re in debt, which could mean paying even more interest over time.

Subscriptions and you aren’t using or getting value from could be worth putting onto the chopping block. This could include anything from gym memberships to streaming services. Once your finances are feeling more healthy, you could consider picking these back up again.

Are you and your friend both paying for the same product or service? In some cases, it may be possible for one of you to cancel your membership and for you to share access to one account or membership.

Just keep in mind that some providers (such as streaming services) have begun cracking down on account-sharing, so this strategy may not always be effective.

Takeaway meals are undeniably convenient, but their cost adds up, especially when you factor in the service charges, delivery fees, tips and more from delivery apps. Plus, some banks and lenders may raise an eyebrow at how much you spend on takeaway when assessing your finances, for example when you’re applying for a home loan. 

It may take a little forward planning and effort, but preparing a meal plan each week can help you narrow down your shopping list to only the essential ingredients. Plus, you can cook big dishes at the start of the week and live on leftovers by the end.

While you can hunt for bargains in the aisles of your local supermarket, you run the risk of succumbing to temptation to spend on things you don’t really need. If you’ve ever gone shopping while hungry, you’ll likely understand.

Instead, you could consider making online grocery orders, so you can order only the essentials and avoid the temptation to spend extra on sneaky treats. As a bonus, you may be able to quickly and easily track any online discounts and specials, and buy in bulk as required.

Electricity and gas bills eating into your budget? As well as looking into alternative energy providers, you can consider changing some of your habits at home:

• In the summer, rethink the temperature you set your air conditioner, or even if you run it at all. Similarly, in winter you may want to reconsider your heater use.
• Try to use energy at off-peak times
• Switch to energy-efficient appliances.
• Consider adding solar panels to your home – the cheap energy and potential to sell it back to the grid could be worth the upfront cost. You may also be able to consider using a green personal loan or similar options to finance adding these features to your home.

To find the cheapest petrol in your area, consider one of the many different apps and online services that are available, so you can save a little each time you refuel. Some services may also offer discounts at selected petrol stations, such as roadside assistance subscriptions. 

You could also look for more opportunities to leave the car at home and use public transport, or get lifts with friends and colleagues.

If your circumstances allow for it, you could even consider switching to a more fuel-efficient car. This could include an electric vehicle (EV) or hybrid – while these models may have generally higher price tags, they can be much cheaper to run – especially if your home has solar panels that can help you pay less for electricity, and a battery for storing more of the energy your home generates.

If you and your household need a break, there may be more affordable destinations to consider than Europe or Hawaii. Taking a road trip will often be much more affordable than flying.

It’s not as simple as it sounds, but if you can get more money coming into your budget, then managing the money going out may become that little bit easier. 

In some jobs, you may be able to access opportunities to improve your skills and qualify for a more senior position. Even if your employer doesn’t offer these programs, you could consider taking a course in your spare time to gain the new skills you may need to qualify for a better job, either with the same company or a different employer.

Other options for raising your income could be picking up extra shifts or starting a side hustle. You could even consider monetising your hobbies, such as selling home-made products or services online, at local markets, or through community networks.

House full of clutter that you don’t really need but are hanging onto? One person’s trash is another’s treasure, as they say. Get onto the online marketplaces, auction houses and classifieds and dispose of some of that stuff you don’t need. You could also consider renting out a spare room, granny flat or even a parking space, if you have one available.

Once you’ve made some changes to your home’s budget, you may find you have some spare money available. Once your immediate needs are covered, you could spend this cash, or you could put it in a savings account or term deposit to earn interest, which could help to manage your household budget in the future. 

You could also invest it in other assets such as shares or cryptocurrency, though you’d need to be happy with the potential risks involved.

You don’t need to have a lot of spare cash to start investing or saving. For example, roundup apps and micro-investing platforms can put spare change from each digital purchase you make towards your savings or investments.

Remember that every Australian's financial situation is different, and no one piece of general financial advice will perfectly apply to everyone. If you’re struggling to find ways to balance your household budget, it may be worth seeking assistance. 

Depending on the nature of your financial issues, consider talking to a financial planner, mortgage broker, accountant, or a free financial counsellor.