Household budgets are challenging to manage at the best of times, but can be even more so when there's external pressure on the Australian dollar that has an impact on the entire economy. We look at five big ticket areas, involving everyday expenses for the household budget and consider suggestions for savings.
Credit card cost-savings
With the average credit card debt at around $3,500, this is the first area where you should take action. The longer you owe money, the worse that debt becomes. Here are four things to look out for.
- Beware of teaser rates and interest-free honeymoon periods – read the fine print. You could build up a stack of debt and be unable to pay it off when the card reverts to the full rate.
- Never use your credit card as a borrowing tool.
- If you find you don’t pay off your full balance every month, consider moving to a no-frills, low-interest card - or use a debit card instead. That way, you are only able to use what you know you can afford.
- Think twice before chasing expensive rewards points and programs. Our research shows that you generally need to spend at least $2,000 or more per month on the cheapest loyalty credit cards to make rewards worthwhile.
With the cost of electricity rocketing and consumers scrambling for better options, the first step is to check whether you're paying too much.
- If you haven't reviewed your energy plan recently, chances are you're paying too much. Go to the CHOICE guide on shopping around for a new energy plan to find out how you can get a better deal and keep more money in your pocket rather than it going to your energy retailer's bottom line.
- Watch out for marketing tricks. Energy companies confuse customers with their terms and conditions, while pay-on-time discounts are especially perplexing.
- Cut your energy bill and make your home a more comfortable place this winter. Check out the CHOICE guide on how to keep your home warm this winter and find out which are the big energy guzzlers around your home.
- As utility bills continue to rise, it’s also more important than ever to know your rights about disconnection.
- While it involves an upfront cost, think about going solar. Australia has the perfect climate for it and we should be taking advantage of our many hours of sunshine. Check out our review here for further information.
Child care cost savings
The cost of child care is a huge drain on many household budgets and it's one of the areas that is flagged to change in the forthcoming Federal Budget, if not before. The average cost in 2012 was $78.50 per day, but the most expensive childcare facilities, for example in the Sydney CBD and in mining towns, are charging families up to $190 per day. With fees predicted to increase by up to 30% by 2018, consumers can take some simple steps to ensure they are accessing all available savings.
- Although the Child Care Benefit is means-tested, if you are receiving income support payments such as a Centrelink pension or have a family income of less than $42,997, check to make sure you are receiving the maximum amount.
- Use an approved child care provider to ensure you can access the Child Care Rebate. It’s not means-tested and refunds 50% of your childcare costs up to a maximum benefit of $7,500, per child, per year.
- Remember you have to apply for the Child Care Benefit to receive the Child Care Rebate, even if your income is above the cut-offs. Don’t be one of the 100,000 families that are missing out.
- For more information, contact the Department of Human Services.
Car insurance cost savings
With increasing competition among car insurers, there are has never been a better time to shop around for a better deal to save money.
- Challenge your car insurance provider at renewal time, push them for a better price and ask for discounts.
- Check out comparison websites to find a policy is right for you.
- Be prepared to switch providers and look around before you "auto-renew" with your existing provider - remember your auto renewal is often more expensive than a quote for a new customer.
Health insurance cost-savings
We recently wrote about health insurance premiums, and it's worth taking a look here as a reminder. It's another big cost for families, so consider these four issues to decide what you can do to reduce the strain on the family budget.
- Review extras coverage – if you cancel it, it won’t impact on your tax and it often doesn’t cover all the treatments you want. Benefits usually only cover part of the treatment costs.
- Have a look at hospital cover – ask yourself why you have it. If the only reason relates to the Lifetime Health Cover or Medicare Levy Surcharge, you could take out the least expensive policy you can find and upgrade later.
- Check for a discount – some funds provide a 4% discount for paying by direct debit or by prepaying your annual premium.
- Check whether you qualify to join a restricted membership fund – for example, people working in the education or defence industries can get good policies.