Your Spending Hit List

Key points

  • Most people we speak to have some obvious ways to save money
  • They take a bit of effort and discipline but if you need to spend less or save more they’ll be worth it
  • Review this list regularly and stay on top of these things to maximise your savings
Overview

This is a list of the most common areas we find people can reduce their spending. It really pays to stay on top of these things and review them regularly. Unfortunately, you’ll find that loyalty rarely pays and by sticking with the same provider for more than a year or so you’ll end up paying more.

 
Your Mortgage

If you have a mortgage chances are that it’s a major part of your monthly spending. Data from the Reserve Bank of Australia shows that if you’ve had a mortgage with the same provider for more than a couple of years you are probably paying about 0.5% more interest than you would if you switched to a new provider.

We find lots of people won’t switch mortgage providers because they think it will be difficult. It will require some effort, but it’s actually pretty easy and you can generally find a mortgage broker that will handle most of the process for you.

How much will you save?
If you have a $500,000 mortgage and can shave 0.5% off the interest rate you’ll save about $200 a month, about $2,500 a year and over 25 years you’ll save a massive $41,000 in interest.

How to get started
Start by reviewing available mortgage rates using a comparison web site, talk to your mortgage broker or contact one of MoneyBrilliant’s licensed mortgage brokers.

 
Electricity and Gas
Over the past decade the cost of electricity and gas has sky rocketed. At the same time, changes to the electricity and gas industries has increased the number of plan options and providers which can make finding the cheapest option difficult. Unfortunately, electricity and gas providers have often left long term, loyal customers stranded on out of date plans with relatively high prices.
We find lots of people won’t switch providers because they don’t know how much they can save, they find the huge range of choices and options debilitating and they think it will be too hard.
 
How much will you save?
We find most people can save about $600 a year on electricity and gas bills by switching from older plans to the cheapest available plan.
 
How to get started
Start by using one of the government comparison sites. Use a government comparison site so you can be confident you’ll get unbiased suggestions and a good range of products to choose from. If you live in Victoria use the Victorian Government’s Energy Compare website. If you live anywhere else use the Federal Government’s Energy Made Easy website. Have one of your recent bills handy to enter your usage data.
 
 
General Insurance (Home, Home Contents, Car etc)
The secret to saving money on general insurance is to shop around every time you have to renew a policy. Unfortunately, you’ll often find that your existing insurance provider will ratchet up your premium each year. Switching to a new provider will often deliver a lower premium – sometimes significantly lower. Make sure you do your research carefully to make sure you are comparing apples to apples. You might find a reduced premium is because of a lower sum insured, a higher excess or some other kind of exclusion.
 
How much will you save?
How much you save depends mainly on the type of policy. On a comprehensive car policy it’s common to find similar policies with premiums that differ by up to $300. On a Compulsory Third Party car insurance policy you may be able to save about $50 by switching to a cheaper policy.
 
How to get started
You’ll need to do some research and comparison shopping. Unfortunately, there are no government provided comparison sites for general insurance so you’ll need to make sure any comparison site you use is providing you with objective information and comparing all the products available. We suggest you check a couple of comparison sites and also check some of the major general insurance company websites to find a better deal.
 
 
Petrol
Petrol prices can be infuriating. In most cities they seem to fluctuate wildly, for no good reason and it always seems they are high when your tank is low!
With some discipline and planning we think you can save a lot of money on petrol. Here’s what you need to do:
  • Understand that in most cities petrol retailers have adopted a frustrating ‘price cycle’. In the price cycle most retailers jack their prices up and then over a couple of weeks prices generally drift down to the low point of the cycle and then shoot back up to the high point and the whole cycle starts again
  • Use a petrol price app (or MoneyBrilliant) to keep track of the petrol price cycle. You want to be buying petrol at the bottom of the price cycle
  • Always fill your car up when prices are at the low point in the petrol price cycle and keep it full. This will maximise the chances you can ride out the high points in the price cycle when prices increase
  • Use your petrol app to find the cheapest petrol in your area – prices between retailers can vary a lot – especially if you are unlucky enough to have to buy petrol at the high point in the price cycle
  • Don’t get sucked in to using petrol discount offers – always check your petrol app to find the cheapest petrol. Believe it or not, you’ll often find a petrol station offering petrol cheaper than you’ll get from some stations even after you apply their discount
  • If you do have petrol discount offers try to use them at the bottom of the price cycle. It seems that at the top of the cycle you’ll usually be able to find small or independent petrol retailers with better prices than you’ll get by using your discount offers. At the bottom of the cycle it seems most retailers are at or around the same price point so your discount offer will make a bigger difference.

How much will you save?

According to the Australian Bureau of Statistics the average car travels about 10,000km a year and uses about 1 litre of fuel per 10km travelled. That means the average car owner buys about 1,000 litres of fuel per year. It’s not unusual for the price of petrol to vary by 30 cents a litre between the top of the cycle and the bottom. So if you consistently purchased petrol at the bottom of the cycle you’d save about $300 over the year.

How to get started

Download a petrol price app to stay on top of the petrol price cycle or keep an eye on this ACCC web page. You might also want to read this article on petrol prices and spending less on petrol.

 
Subscriptions
Lots of things have transitioned from outright purchase to subscription style services. In the old days people would buy a movie or buy a music album. These days we are more likely to subscribe to a TV streaming service or a music streaming service. The problem with subscription style services is we are more likely to have multiple subscriptions, more likely to pay for them using an ongoing credit card or direct debit payment and more likely to keep paying for the service even when we don’t use it. Over time, these small payments for unused or overlapping services can really add up.
We recommend you regularly review your subscriptions and cancel the ones you aren’t using or you don’t need. One way to do this is to just review your transactions regularly. We can also help by sending you a list of subscriptions we’ve automatically detected in your transactions. We do this as part of many of our coaching programs. Things to look for include TV streaming services, music streaming services, online media subscriptions and gym subscriptions.
 
How much will you save?
How much you save will depend on how many subscription services you have and how many you cancel. Chances are you won’t notice a massive difference in your spending, but over time it will add up. It’s best to think about it like this – if you are paying say $15 a month for a TV subscription service you don’t use, by cancelling it you’ll save $15 in the first month. By the end of the year you’ll have saved $180. If you invested your savings at just 1% over 5 years you’d have almost $1,000!
 
How to get started
Start by reviewing your transactions to find unused subscriptions or enrol in one of our coaching programs and we’ll send you a list of subscriptions we’ve automatically detected in your transactions.
You might also want to read these articles on how to cancel subscription services.
 
Groceries
For a lot of us, groceries is a major expense and so might represent a significant cost saving opportunity.
 
How much will you save?
How much you save will really depend on how much you spend. The more you spend and the worse your spending habits the more you should be able to save. In most cases we’d expect people to be able to save at least 10% of groceries by being smarter about what they buy and how they spend.
 
How to get started
There are a number of tactics you can use to reduce your grocery spend including:
  • Check the prices for the things you buy and figure out which of the grocery stores is consistently cheaper. Do your main shop there.
  • Check the catalogs for specials and grab whatever you need when it’s on special. If it’s not perishable think about buying more when it’s on special. You can even access catalogs online at sites like Lasoo
  • Make a meal plan and shop to fill your plan – this will help stop impulse purchases
  • You might also want to read this article for a more complete rundown on grocery spending tactics.
 
Health Insurance
Health Insurance just seems to get more and more expensive each year. We aren’t going to tell you whether you should have it or not – but if you decide you are going to have health insurance we suggest you regularly review your policy to make sure you only have what you need and to make sure you are getting a good deal. We think one of the best ways to do this is using the Federal Government’s private health insurance website.
If you decide you won’t have private health insurance make sure you consider the effect of the Medicare Surcharge Levy – the extra tax you’ll have to pay if you don’t have private health insurance.
 
How much will you save?
It’s difficult to say how much you’ll save, but given the high cost of private health insurance it’s well worth a bit of work to check. 
 
How to get started
  • Check what you are paying and the cover you have. If you have cover for things you don’t need consider updating your policy. Chat to your provider about your options and what you’ll save
  • Head to privatehealth.gov.au and check your policy against what’s available.
  • If you decide you won’t have private health insurance make sure you understand the risks of not having cover and the Medicare
 
Telecommunications (phone & internet)
We often take costs of modern telecommunications and their cost for granted. We know from experience that the costs of mobile phone plans and internet plans vary a lot and by shopping around and staying diligent you may be able to save a lot. Plus, if you do your research, you can often get access to the bigger and better telecommunications systems via cheaper providers than the big ones. To some extent, you pay for what you are allowed to use – so be certain about the calls you make and the data you use and pay for a plan that give you what you need. If you are a big user, unlimited plans might also be a good option for you.
 
How much will you save?
If you’ve never really checked your plans there is a good chance you’ll be able to save about $20 a month for each phone or internet plan you have. This seems to be about the range between expensive plans and cheaper (but not necessarily the cheapest) plan. That will add up to $240 per year.
 
How to get started
  • Check your current plan and what it provides and what you use
  • Check the other options available that suit your needs. Try using a comparison site like whistleout to get a good sense of what’s available
  • Look for options from non-traditional providers like Woolworths, Aldi and Kogan for deals

This summary has been prepared by MoneyBrilliant Pty Ltd (AFSL 492711). The information in this summary is of a factual nature only and does not constitute legal advice. You should seek legal advice from a legal practitioner before relying on this information. We are not suggesting or recommending that you take any particular course of action in relation to any financial product or service. It does not take into account your personal circumstances or objectives. If you need financial advice or taxation advice you should seek advice from a licensed financial adviser or tax agent. You may also be able to access additional information from the websites of the Australian Securities and Investment Commission (ASIC) or the Australian Taxation Office.

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