Budgeting is an essential tool for any family wanting to stay on top of their finances and get ahead. If you’ve been finding it difficult to reach that savings goal or simply want to become more money savvy, now may be a good time to reassess your finances.
Effectively managing and understanding your financial position will help you single out areas where you could be reining in your household expenses, potentially saving you hundreds or even thousands of dollars each year.
Consider switching home-loan providers
While the idea of refinancing your home loan may sound like a daunting prospect, the potential for increased savings through a lower interest rate is certainly worth looking into. Many lenders offer lower rates to new clients, which could end up saving you thousands of dollars if you opted to switch.
When considering whether to refinance, a good place to start is a reliable switching calculator. Based on MoneySmart’s Mortgage Switching Calculator, an average homeowner with a loan of $300,000 could potentially save around $56,335 over the lifetime of their loan if they switched from a rate of 5.10% to a lower rate of 4.00% (based on a remaining term of 25 years).
Keep in mind there are often fees associated with refinancing, such as break-cost or discharge fees, so have a chat to your mortgage provider about what additional charges you could be up for if you were to switch providers.
Review your daily expenses with a budgeting app
Everyday expenses have a tendency to be overlooked. Your phone plan, daily cup of coffee or rarely used gym membership can all add up significantly over time, yet remain largely unnoticed.
To combat unnecessary spending, use a budgeting app such as ASIC’s TrackMYSPEND or MoneyPad to help keep track of your purchases. This will allow you to identify any areas where you may be able to cut back. For instance, could you ditch the costly gym membership in favour of outdoor workouts? Do you tend to use Uber a little too frequently on the weekends when you could take public transport instead? Tweaking your everyday expenses (and habits) is a simple yet effective way to amp up your budgeting abilities.
Cut down on child-care expenses
Child care can be a huge financial strain on the family budget. A recent study conducted by finder.com.au found that almost 2 in 5 Australian parents with children under 12 admit to day-care fees being the biggest cause of financial stress when it comes to having kids.
However, grandparents can be a fantastic way to cut the cost of daycare.
ABS statistics reveal that almost 900,000 Aussie kids aged 12 and under are regularly cared for by their grandparents. By opting for grandparent care just two days per week, you could be saving up to $6,344 each year. Not only does this allow for more effective saving, but it also helps to establish a closer bond between your children and their grandparents during an important part of your child’s development | Bessie Hassan, finder.com.au
Embrace the sharing economy
Research conducted by finder.com.au found that 1 in 5 Australians now supplement their income with a side hustle, earning them an additional $7,300 per year on average. The sharing economy can be a great way to approach this, allowing you to offer your unused assets or services for a fee across a variety of digital platforms.
The space is no longer limited to just Uber and Airbnb either – there are a myriad of local start-ups to choose from and it pays to think outside the square. Rent out an unused car space, offer up your creative skills like painting or design, share your car or caravan or even lease out unused tools in the back shed.
While it may not bring in enough to rely on as a sole source of income, the sharing economy can be a low-fuss – even fun – way to boost your savings.
When it comes to getting a handle on your finances, there really is no time like the present. Even the smallest changes to the way you manage your money can end up having a significant impact on your savings in the long run. With all this in mind, remember that every family has their own set of needs and priorities, and it may take a couple of attempts to refine your approach to budgeting before you find a method that works best for you.