Matt Johnson* says Australian households are being encouraged to adopt new savings habits during the pandemic.
From backyard DIY projects to perfecting sourdough, the coronavirus lockdown has fuelled Australians’ creativity to stave off boredom.
But in these uncertain economic times, households are also being encouraged to adopt new savings habits.
Canstar financial services executive, Steve Mickenbecker told The New Daily families typically build budgets around salaries and micro-spends like grocery shopping.
But Mr Mickenbecker said this strategy ignores major savings that can be found with big-ticket items like mortgages and utilities.
“[Families] forget about them because they are harder [to obtain],” Mr Mickenbecker said.
“But if effort is put in to find a better deal on a home loan or insurance, you can save hundreds of dollars.”
With that in mind, here are some ways households can save cash during the pandemic.
Cut out non-essential spending
As families spend most of their time at home, spending on UberEats and content streaming services can soar if left unchecked.
Matthew Hawkins, Director at Elevate Wealth Solutions, told The New Daily households should pay for these non-essentials with the money saved on fuel and other less in-demand services.
“It’s all about not adding additional expenditure to your budget, but redirecting funds to new essential items or budgetary line items,” Mr Hawkins said.
He also recommended consumers monitor their bank accounts for direct debits — including gym memberships — and cancel or negotiate payments.
Review your bills — and your usage
Mr Mickenbecker said recent reforms to the energy retail market have made it easier for consumers to compare providers.
He said households can receive separate quotes from shortlisted retailers and make a judgement call after assessing their supply charges and discounts.
“I wouldn’t put a dollar figure on [savings] because it’s different for every household, but it’s one of the largest saves you can make,” Mr Mickenbecker said.
Mr Hawkins said beyond shopping around, families should review their everyday use of utilities and other items like home phone and internet.
“Reassess what you’re paying for using your data, call up your service provider, get a lower cost and make sure your plan is tailored to your new world versus your old world,” Mr Hawkins said.
Ask your bank for a better deal
Mr Mickenbecker said Australians have a variety of options when renegotiating home loan repayments.
Repayment “holidays” and other measures introduced in response to the coronavirus can offer short-term relief, he said, but households should be cautious of the long-term burden.
Loans will still accrue interest during the deferral, resulting in increased payments at the end of the six-month period.
Instead, Mr Mickenbecker said refinancing — with their current lender or another bank — makes more sense.
“You can take an avenue with your bank and say, ‘Look, I have 15 years to run with my loan but I’d like to extend the term, what would that do to my repayments?’,” Mr Mickenbecker said.
“Stress that household incomes have been cut back, and you want to make your repayments affordable.”
“And look at the interest rate you are paying.”
“Is it closer to 3 per cent than 2.5?”
“Because if it is, you should look to get a lower interest rate.”
Pick up a side hustle
With some Australians now unemployed or working fewer hours, embracing a new stream of income could help households rebound.
Finder.com.au Managing Editor, Kate Browne told The New Daily the renewed shift towards technology has opened new income streams, particularly for those who formerly worked in creative industries.
“You can sell services and certain skills on websites like Airtasker or Fiverr — it’s not physical labour, but little jobs can stimulate cash flow,” Ms Browne said.
“And a lot of small businesses, especially new ones that have risen up in the outbreak, need people to help with various tasks.”
“So, if you have a desired skill, it’s definitely worth doing if you have time on your hands.”
Meanwhile, Mr Mickenbecker said the extent of the economic downturn means that people who lose their jobs might have to look at roles they wouldn’t normally consider.
Several industries are bolstering their workforce to cope with a spike in demand — and the Federal Government has launched a new jobs website to help those looking for work.
The advertised jobs include roles in supermarkets, mining, manufacturing, agriculture, health and aged care, transport and logistics, and government services.
* Matt Johnson is a finance journalist at The New Daily. He tweets at @matte_johnson.
This article first appeared at thenewdaily.com.au.
