6 Ways Home Buyers and Owners Can Save Thousands Of Dollars Per Year
Home owners and buyers have been feeling the pressure of rising living costs and interest rates, with ABS data showing the cost of living shot up an extra 6.1 per cent in the June quarter of 2022.
Increased mortgage costs have contributed to financial pressures for the one-third of Aussie households with housing debt. For home buyers, strained budgets have made it harder to save to purchase a home.
On the hopeful side, there’s much you can do to trim your expenses. Using all of the strategies below, a household could save up to $7824 per year, although your own savings will depend on your personal situation.
1. Reduce loan interest and personal debt
Instead of paying what the home loan industry dubs a “loyalty tax”, shop around for a lower interest rate, suggests Domain Home Loans general manager Kareene Koh. “On average, what we’ve seen in the last 12 months is customers saving $2000 per year by refinancing,” she says.
Talk to a broker or your bank to work out the right product for you. Bear in mind that fixed-interest products don’t allow you to make early repayments and are calculated to take into account what the variable rate might do.
Along with paying down debt, Koh advises reviewing and consolidating any personal debt and credit cards. Avoid buy-now-pay-later products, which typically feature high interest.
2. Slash waste
After housing, food is our largest household expense. However, each year we throw away food to an average value of about $1000 per person or $2500 per small family, according to Dr Gamithri Karunasenan, project manager at Fight Food Waste CRC.
To avoid waste, follow the mantra of “plan, shop and cook”, she says. First, check your fridge and cupboards for the oldest food items, then base a meal plan for four days on that. This leaves days for eating leftovers and changes to your plans. Convert your meal plan into a shopping list and stick to it.
3. Eat economically
Trim the food bill further by eating at home, packing your own work lunch and drinks, going vegan, buying in bulk, selecting less expensive brands and food items, and growing your own food.
Cutting out takeaway could save you $880 annually – which is the average spend on takeaway per person, according to a 2019 Australian study.
4. Lower your energy bills
“In the current crisis we have with wholesale electricity, getting cheap deals is difficult,” says Professor Bruce Mountain, director of the Victoria Energy Policy Centre at Victoria University.
The answer, he says, is rooftop solar. After the initial capital expense, expect to see savings within five years. While expensive, batteries could be worthwhile as grid power prices rise, particularly for high energy consumers, he says.
Decrease consumption where you can, Mountain says. The most effective low-cost strategy is to seal gaps around windows and doors and install thick curtains.
Also, clean out and defrost the ice from your fridge. “It takes energy to keep something cold,” he explains.
Space and water heating contribute the most to energy bills. Split-system heaters are the most efficient, Mountain says. Shorter showers also make a big difference.
If you can, switch from gas to electricity – it’s cheaper and you avoid paying the fixed daily charge on two utilities.
5. Decrease your transport bill
The best long-term solution to petrol costs, Mountain says, is an electric vehicle charged by your own rooftop solar. A more affordable option is a secondhand EV or plug-in hybrid, he says.
He’s also a fan of electric bicycles and scooters and uses the latter to get to the train station and supermarket. “They are reliable and cheap as chips – they are massive time savers,” he says.
Working from home, catching public transport, car-pooling and enjoying more local activities can also help reduce your transport bill.
6. Quit alcohol
You could save a sizeable amount by giving up alcohol, but this obviously depends on your consumption.
According to a Finder analysis, in 2021 Australian households forked out an average of $47 a week ($2444 annually) on alcohol.
