7 Savings Tips to Fight Rising Inflation and Interest Rates

Review your cash flow quarterly to stay on top of your finances and better see where to cut costs. (Source: Getty)

There’s never been a better time than now to review your finances.

The rising cost of living has become a major concern for Australians across the country, with high inflation and consecutive interest rate hikes already having an impact on households.

And many are tightening their purse strings and making changes to help.

Here are seven popular ways these everyday Aussies are cutting back to help combat rising costs.

1. Start with the small things

For Kate Reynolds, small changes lead to big savings.

Her money-saving tricks started with using heaps of blankets to save on heating costs and swapping books with friends.

“I read a lot, so I spent a lot on books. Now I share them with other friends and use the library,” she said.

“I also light candles in the house to give the illusion of warmth and warmth. I swear. And it makes the house cozy and comfortable.

For the holidays, she and her husband opted for camping. “At first it was expensive to get all the equipment, but now we have everything; our camping holidays are cheap – we just need food, fuel and firewood. You can buy a lot of used camping gear.

“I learned to weave so I could make wall hangings as gifts for my friends and family, rather than spending a lot of money.

2. Walk, cycle or use public transport instead of a car

In addition to saving on heating costs, sharing books and going camping, Reynolds also implemented a 30-minute walk rule.

“If it takes 30 minutes, I will walk. It’s great exercise and saves on fuel and public transit costs.

3. Cups of coffee

When Jaimie Abbott and her husband Matt counted the cost of the coffees they had spent over the past year, they were stunned.

“We each bought a coffee to go – twice a day. When we looked at our budget throughout the year, we had actually spent over $7,000 on coffee,” the mother-of-two said.

Concerned about rising rates and the effects on their variable rate mortgage, they decided to buy a high-end coffee machine and cut-out take-out food.

“We spent $1,400 on a coffee machine and now we have all our coffee at home. I also bought a coffee warmer, which keeps the coffee hot for hours. I fill it out before I leave home for work,” she said.

In two months, the couple have already reduced the cost of the machine in savings.

4. Rethink your meals

For non-perishable items, you can buy in bulk to save, such as diapers, toilet paper, etc.

Reynolds said she plans every meal for the week and does a big shopping spree to make sure the fridge is stocked, so they don’t have takeout.

Linda Tran and her partner said they saved about 60% of their food bills by cooking at home.

“It can save a ton of money [rather than it being] wasted on takeout. And I learned fun cooking techniques. My partner and I saved so much.

Similarly, Abbott bought a $20 slow cooker to make their cooking easier, cheaper, and just as delicious as a take-out meal.

“We are almost out of takeaways. As much as we like to take out, our slow cooker was amazing and we made delicious slow cooked lamb, brisket and chicken curries,” she said.

With soaring food prices, cooking at home is a popular discount.

5. Regularly review your cash flow

At just 27 years old, Tran owns three properties and therefore understands the importance of keeping control of his repayments and finances.

His number one tip for tackling the cost of living is to review cash flow regularly.

“Pull out your notebook, app or spreadsheet and calculate what’s on your plate. I normally review my cash flow quarterly, then adjust and reallocate my funds accordingly based on my expenses “, she said.

Tran also likes to pay off her small debts first – she doesn’t have a credit card but has a HECS loan, which she makes it a priority to pay off first.

“The HECS loan escalation rate increased to 3.9% for 2022 from 0.6% last year.”

“Nobody likes a hidden debt that never seems to go away,” she said.

6. Shop around for a better rate

As part of Tran’s regular cash flow review, she also reviews her home loan.

“It’s really helpful, given the sharp rise in interest rates recently. Compare the prices; I am in the process of negotiating a better deal with various banks.

Greg Mawer FCPA and director of Accumulate Accountants agrees that anyone with a mortgage should shop around for a better deal.

“The fidelity tax is real – it’s the price to pay for being lazy. I find it odd that people are happy to stand in line for 20 minutes to save $10 on gas, but they won’t invest a few hours to potentially save tens of thousands on their mortgage.

And, if you have savings, it’s also a good time to shop.

“There are high savings accounts with rates in the low three percent range and term deposits in the four.”

The concept of shopping around for a better price can also be extended to everyday items.

The same products can have wildly different prices at different stores, so it always pays to look online and save.

7. Take a scramble

Parallel unrest is also helping to combat the rising cost of living.

Tran started playing around with stocks to build his portfolio. “Why live below your means when you can increase them? Look for a side hustle, something you enjoy.

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