Keeping up with the rising cost of living.

Hi, I’m Bron Lawson Westpac’s Davidson Institute. Thanks for watching our video on ‘Keeping up with the rising cost of living’. It feels like everywhere we turn at the moment we see another cost going up and this is having a very real negative impact on the lives of many Australians. In today’s presentation we’re going to have a look at what may be causing living costs to rise as well as some actions we can take to help keep up with the rising cost of living.

Before I get started, I need to let you know that the information contained in this presentation is general in nature and has been prepared without taking your objectives, needs and overall financial situation into account. For this reason, you should consider the appropriateness for the information to your own circumstances and, if necessary, seek appropriate professional advice.

So, as I said, today we are going to look at some of the possible causes of the rising cost of living, and then some of the things that we can do when it comes to reducing the costs associated with things like housing, energy, fuel, food, and our lifestyle, finishing up with a few things to look out for and where help may be available.

The increases to our cost of living are not attributable to any one cause but rather a series of circumstances that have occurred. Firstly, consumer demand continues to rise. We continue to purchase and consume goods and services at an ever-increasing rate.

Possibly as a consequence of lock downs, ill health, border closures and so on, supply chains right around the world have been disrupted resulting in a decrease in availability of even everyday goods. This decrease in supply results in price increases too as people are willing to pay more for items in short supply.

Rising oil and gas prices around the world also contribute to price increases. With all of these things contributing to increasing prices and consumption, inflation has also climbed rapidly for the first time in many years. In an attempt to curb inflation, the Reserve Bank of Australia is increasing interest rates adding yet another cost increase for Aussies with a mortgage.

With so many of these things being outside of our control, it’s hardly surprising that people are starting to feel somewhat overwhelmed and increasingly concerned about how they’re going to make ends meet. That’s why it may be helpful to spend a moment taking stock of where you stand at the moment, look towards what is coming up, and identify what actions or behaviours you can control to help you keep up with the rising cost of living.

So, what can we do to try to maintain the lifestyle we want? It’s about maximising our income and minimising costs. Maximising income is a combination of doing as much paid work as you can and ensure you’re receiving any government assistance you’re eligible for. Check out the Services Australia website for information on what help is available and the eligibility criteria.

You might also decide to look at alternate ways of bringing in more money such as, having a clean-up at home and selling unused or unwanted goods. You might consider hiring out things you own such as sporting, camping or gardening equipment, or even designer clothes.

Or you may even think about turning a hobby or skill into a side business … for example, tutoring, cooking, arts and crafts, or even sharing your tech skills and knowledge. If sourcing additional income is something you might consider, remember that increased income may also impact your tax position. So check it out with your financial adviser or accountant first.

Many people though would already have maximised their income so throughout the remainder of this webinar we’re going to explore some way to minimise costs. This starts with understanding where you’re spending money now to determine whether there are ways to reduce those costs. A good starting point may be using a money diary or the Spend Snapshot tool on the Davidson Institute website.

But first, let’s delve a little further into some ways we might explore reducing or regaining control over some of our expenses. Then let’s look at whether there may be some money leaks that we could plug. In terms of looking at how we can minimise costs, let’s look at housing first as this is one of our most significant costs.

One thing you might think about is decluttering your home … which might generate some income by selling items that you no longer need or use. Household services, such as a cleaner or gardener, may need to be reconsidered unless they are necessary.

It may be helpful to fix any leaking taps or toilets or even taking shorter showers to reduce water costs … all of which are also good for the environment. Similarly, watering the garden or washing the car in the cooler mornings or evenings may help to cut down water usage.

Cleaning products can be expensive, but some clever and thrifty people make their own cleaning products from common pantry items. Check out the internet for ingredients and recipes, and other cleaning hacks that may be helpful in reducing your grocery bills.

Home owners with a home loan might also like to explore how they can save on interest costs by using an offset account or making higher or more frequent loan repayments. To find out more about saving on interest watch our videos on ‘Getting ahead on your home loan’ or ‘The impact of rising interest rates’.

Unfortunately, for some, it may mean seriously considering whether you can afford the home you currently live in – whether that’s the rent you pay or your home loan repayments. Confronting? Yes, but a reality for some. With rents increasing and interest rates continuing to go up, and, in many cases, no corresponding increase in income, it’s important to realistically consider whether you may need to downsize, or move to a cheaper suburb or town.

Some may need to think about moving in with friends or family or whether some other type of shared accommodation might be an option. Perhaps, if you have a larger home with space to spare, taking in a boarder may be an option to help you cover some of your costs and enable to you stay there. Reducing your independence or freedom in the short term, may be a better option than a longer-term financial loss

Another cost that’s regularly in the media is energy costs. There are some simple things we can do here and while they may not seem significant the accumulation of small changes adds up over time. Much of it comes back to being more mindful of how we use energy. One very simple thing to do is to turn off lights when you’re not in the room. Just flick the switch off as you leave the room.

Similarly, set electronic devices or appliances to automatically switch to a power save or sleep mode when they’re not in use.

Australian summers are typically quite warm, so the use of cooling appliances increases too, but for most people they don’t need to be on high to make the house cold. They only need to take the edge off the heat to make life more comfortable. Similarly, when we get into the cooler months, dress appropriately for the climate and keep the home at a comfortable temperature rather than too warm.

Another thing to do, that many people don’t think of, is to check your refrigerator seals. If they’re not sealing properly, your fridge is having to work harder to keep your food cool. In fact, check the seals on your windows and doors too, to ensure you’re getting the most effective use of heating and cooling appliances. Also, keeping your air conditioner filters clean and free of dust means that they’ll work more efficiently too.

Appliance manufacturers are developing ever more energy efficient appliances, but even thoughtful practices such as only using the dishwasher or washing machine when you have a full load, can also help to reduce energy use. Also, think about drying your clothes outside in the sun or on an indoor clothes line instead of using the dryer.

You could also consider whether it may be worth investing in solar panels, upgrading to LED light globes, or updating old appliances to more energy efficient new ones. While this may mean an initial outlay of cash, the long-term energy use reduction may be worth it.

And, of course, finally understand your energy consumption and do your research to check whether you have the best deal available for your circumstances. Then regularly review whether your provider is still the best value for money. Websites such as ‘Switch to save’ or ‘Energy made easy’ may be helpful, and check online for any government help that’s available in your state.

Now let’s move to fuel costs, which are another cost regularly in the media. What are some of the actions we can take here? Where possible, reduce the use of a motor vehicle. This may mean using public transport, or even your own legs to cycle or walk. Some people may be able to car-pool instead of individuals using their own vehicle.

Plan your trips in the car to include multiple destinations in one trip and avoid multiple trips by planning what you need to do at each destination. There’s nothing worse than having to retrace your steps because you’ve forgotten something.

There are also a number of apps available for your phone that can help you to locate lower priced fuel. Check out which one may be most helpful to you. There may also be fuel discounts available through loyalty programs, club memberships and so on, so make sure you take advantage of those too.

For some people it may mean adjusting your driving habits to use less fuel. Even things like ensuring your tyres are inflated to the correct pressure, and not carrying excess weight in the car, may be helpful in reducing fuel consumption and cost.

Another significant but necessary cost for many families is food, but again there are ways that these costs can be reduced by simply being more mindful about how we source and consume this essential. Maybe it’s time to swap the convenience of eating out or getting takeaway with cooking more meals at home. More meals at home potentially means more groceries so why not team up with neighbours, friends, or family and buy in bulk at a discounted price.

Shop for specials in the supermarket and then menu plan with what you have on hand. Menu planning can also help to minimise food wastage. As fruit and vegie prices rise, look for seasonal specials and consider using frozen fruit or vegies that are not in season. Some people may also have the space and time to grow their own vegies and herbs.

No-one likes to have to cut back on the things they enjoy in life but here’s a few things to consider that may help reduce your lifestyle costs. While it’s important to stay fit and healthy, gym memberships can be expensive so look for free or lower cost exercise options. In terms of entertainment, it may mean swapping a trip to the cinema with board games or a book at home.

Clothing is another item that can become expensive so consider repairing or upcycling, or even buying second hand. There are plenty of retailers or online sites offering discounts or rewards so search these out and take advantage of them. If you’re shopping online, check whether there are any coupons or codes available for discounts.

Many of us are very reliant on our phone or mobile devices for communication and entertainment, but it may be worthwhile to check out your mobile and data usage and considering whether you can use less, or whether you’re not using all the data you’re paying for, and downgrade your plan. At the very least, shop around to see whether you can get a better deal.

Also, check your bank statements to see whether you are paying for subscriptions that you no longer use or that you could reduce. Some people may have accumulated multiple streaming subscriptions as they chased certain programs to watch, so see if you can reduce these or even think about switching to one of the free on-demand television services now readily available.

So that’s a few quick ideas on some ways we may be able to reduce the cost of housing, energy, fuel, food, and your lifestyle. Now I’d like to have a look at some pitfalls to be aware of, starting with some common spending leaks that you may be overlooking. These won’t apply to everyone but may be a timely reminder …

For many people working in the city, the daily coffee ritual is ingrained … but be aware of how much it may be costing you and choose whether you want to curb your coffee craving or whether it can be satisfied with a make-your-own. Your $4 daily coffee could be costing you close to $1,000 a year. Bottled water is similar – choose whether you want to buy bottled water or use a refillable bottle you can fill from the office kitchen or council provided kiosks when you’re out and about.

Using peak hour anything is probably costing you more – time your public transport travel with off-peak fares, try to time your home energy usage with off-peak tariffs, and compare ride-share app prices to choose the lowest fare. As already mentioned, some of us may have accumulated multiple subscriptions … pay tv, online libraries, consumer services providers … so review your subscriptions and decide whether there may be some you can cancel or put on hold.

ATM fees is one that many people don’t tend to think of … while your own banks’ ATM may be free, when you use an independent service it’s often not, so try to use your own bank where possible or withdraw money when you making an EFTPOS purchase, like buying the weekly groceries. 17.00 Shopping online can be very convenient however look out for when delivery costs may be costing you more than an instore purchase.

And finally, on this page, be aware of any online in-game purchases you make. They may only feel like small amounts at the time but if you’re making them regularly then they may be accumulating quickly

This list is by no means exhaustive but has hopefully prompted you to have a look at your own spending … perhaps keeping a spending diary … and making any changes you feel may be helpful in reducing your spending leaks. Finally, I just want to look briefly at some potential warning signs that may be indications that you or someone you know is struggling to keep up with the rising cost of living and where you may be able to find some help.

Credit cards are a great tool when you’re short of cash but if you’re using them for everyday purchases and not paying them off each month, this debt may accumulate into a longer-term problem. Similarly, buy now pay later services are designed to spread the cost of items purchased over a longer period, however most people should aim to pay their everyday living expenses from their regular income, not accumulate them into debt to be repaid in the future.

Ignoring reminder notices from your lender, credit card provider, or utilities provider may also become problematic in future. Many organisations are more than willing to help and have specialist teams in place to help. If you’re struggling to pay, be proactive and seek whatever assistance is available, such as implementing a regular repayment program, rather than have it possibly escalate into legal action down the track.

The good news though is that there are people available to help. If you would like to speak to someone about your overall financial position the National Debt Helpline offers step by step guides to help people tackle their financial difficulties . Their professional financial counsellors offer a free, independent, and confidential service, to help you regain control of your financial position.

Your financial services provider may also offer services to help you through difficult financial periods. As always, it’s better to seek their help early to avoid further problems in future. If you’re a Westpac customer, talk to our helpful team at Westpac Assist about options to help you navigate financial setbacks

Thanks for watching ‘Keeping up with the rising cost of living’. I hope you’ve found the information useful and helpful, and I encourage you to check out the other resources on the Davidson Institute website to help build your financial confidence. Bye for now.