Whether you’ve been keeping an eye on the latest financial news sources or you’ve peeked at your own bank account, you might sense a quiet storm brewing on the financial horizon. That’s right, we’re facing a rising cost of living crisis, and it’s normal to feel uncertain about how to cope.
With the estimated monthly costs for a family of four in Australia rising to over $4,220 in 2023, it’s never been more important to be mindful of your spending. Things that once were in your budget (like everyday essentials, groceries, etc), might be pushing the limits on what you can afford. If you feel your wallet is stretching farther than ever, you’re not alone. This is the perfect time to find ways to cut costs, make the most of what you have, and strengthen your financial tool belt.
Why Is the Cost of Living Rising?
To begin, let’s take a closer look at why the cost of living is rising so much nowadays. You don’t need an economics degree to grasp the basics of what’s behind skyrocketing prices. Though it’s not fun to look back on these days, the COVID-19 pandemic is largely to blame.
The cost of necessities like energy, as well as supply-chain demand issues, have been on the rise since the pandemic. Though most of the world has returned to normal, that doesn’t mean these challenges are solved overnight. Food, gas, essentials, and so on cost more than ever before, and they don’t seem to be slowing down.
In Australia, the overall price levels have increased 23%. That’s significantly lower than wage growth, meaning the vast majority of families feel this strain on their budgets. Unfortunately, inflation is unavoidable, but there are always ways to cope.
It’s about avoiding spending more than you bring in, ensuring you still have the space to save for a rainy day. To inspire you, here are achievable steps you can take to handle those spiraling cost of living costs.
Make a Budget
If you only follow one tip on this guide, make sure it’s this one. If you don’t know exactly how much you’re spending each month, it’s impossible to stay on track. It’s true that creating a budget feels overwhelming at first, but it’s a key part of long-term financial wellness.
However, your budget doesn’t have to be an intimidating spreadsheet. It can be a note on your phone, a budgeting app, or even just a pen and paper. When you understand how much you’re spending vs. how much you’re earning, it’s easy to see where you might be able to save.
Cut Your Food Costs
When it comes to overspending, most people can point directly to their food budget. We get it—food is delicious! The average grocery bill per month for an Aussie household is over $530 per person, and this only takes into account purchases from the grocery store, not eating out. Instead, try to save on food with these tips:
- Skip the meals out: We all love dining at our favourite restaurants, but it’s not always the most cost-effective choice. When you can, eat at home.
- Freeze your leftovers: Food waste is a serious issue, and unfortunately, much of what we buy ends up in the garbage. Instead, create a meal plan and freeze those leftovers!
- Use loyalty cards: Most grocery store chains want to reward loyal customers. Shop in the clearance sections, take advantage of coupons, and put those reward points to work when it’s time to grocery shop.
Avoid taking on debt
When times are tough, it’s easy to fall for common lending traps like the dreaded payday loan cycle. Additionally, it’s all-too-easy to swipe your credit card when you’re not sure how you’ll pay for something. While this feels good at the moment, it’s never fun to pay interest or deal with the long-term stress of debt.
Whether you’re buying new clothes or taking a long-awaited holiday, avoid taking on debt. When inflation is high, it’s risky to tie yourself to a high-interest rate. Things might get worse before they get better, and you shouldn’t sacrifice tomorrow for a quick payoff today.
If you already have debt, prioritise your payoff plan. Nobody wants to worry about late fees, payment debts, and rising interest rates. There’s enough on your plate already! If you don’t already have a payoff plan, now is the perfect time to get started.
The Bottom Line on the Cost of Living Crisis
Ultimately, we all wish we could bury our heads in the sand and ignore the rising costs. From groceries to fuel, it’s never been harder to make ends meet. Still, it’s important to stay positive and focus on the things you can control. Namely, focus on building your strong financial habits so you can create a brighter future for your family.
Need help? You’re not alone. Contact a member of the Debt Busters team on 1300 368 322 for personalised guidance regardless of your starting point. We understand the cost of living crisis, and we know how to put your goals first.