Eliminating sneaky expenses
During a cost of living crisis, many of us look for obvious ways to cut expenses, like cancelling streaming services, dining out less, and skipping extras in our shopping baskets. But what about the less obvious ways? Sneaky fees and charges can increase our day-to-day living expenses without us realising it. Here are some hidden or avoidable costs that could be draining hundreds from your annual household budget. Do you check restaurant bills before paying? You might read over the items, but what about the fine print? Some restaurants and cafes include an automatic service fee. Not a card payment fee or public holiday surcharge, but an additional fee, sometimes up to 12%. When queried, it may be explained as a discretionary tip to service staff. This means you have a choice – ask to be sure – but remember the business owner is struggling to survive too. Be aware though, that if the fee is for service staff, then you tip your server on top, you could be paying way more than you should. Check all charges on your restaurant bill and question anything you don’t understand. An absolute necessity for all travellers, but if you haven’t kept up to date with your credit card’s T&Cs (and who does?) you may be doubling up. Competition among credit providers has resulted in many offering complimentary travel insurance provided you pay for your travel using their credit card. Read the fine print to ensure you meet the qualifying conditions, the policy is underwritten by a reputable company and covers what you need. Understand the claims process and make sure the company has an emergency contact line easily accessible from overseas locations. Additionally, many policies cover car-hire excess. This excess can be costly if purchased through the car hire company and unnecessary if it’s already covered in your travel insurance. Double-check your policy! Warrantees on purchases where for a small additional charge you get extra cover, can be unnecessary or over-priced. Take a close look and cancel or downsize if required. Subscriptions with free trial periods can be traps ready to spring the very second the trial ends. Ensure you: Many apps are free provided you can put up with advertisements. Try free versions first, then if ads become annoying, upgrade to the ad-free version later. Life insurance is designed to pay your debts and support your dependents if you or your spouse dies, becomes ill, or disabled. So, if you’ve paid off your home, you’re debt-free and kid-free – or at least they’ve flown the coop – should you still be paying for life insurance? Your financial adviser can help you answer this question. Google Play, Amazon Appstore, Apple App Store, are just a few app stores available. Check your devices for one or more of them. Open the app, navigate to the Payments and Subscriptions menu and open Subscriptions. You may be surprised by the things you’re paying for. It’s easy to lose track of everything we, or family members, have signed up for. Asking the right questions, checking the fine print and auditing subscriptions and apps, can add up to some serious annual savings. Similarly, your financial advisor can help you reduce costs by reviewing and consolidating insurance policies, savings and superannuation investments. It’s tough out there and everyone is seeking ways to increase revenue and reduce running costs. Your household is no different – it’s in your hands and it’s do-able.
Quarterly Economic Update: July-September 2024
The Australian economy is still growing, but things are moving slower than usual, and the Reserve Bank of Australia (RBA) is being cautious with any changes to interest rates. They’re waiting for inflation to settle before taking further action. GDP Growth: Slowly But Surely While the economy is growing, it’s not as fast as we might like. Over the June quarter, the economy expanded by just 0.2%, with a 1.5% growth over the financial year. While these numbers sound positive, when you factor in Australia’s growing population, the story changes. For the sixth quarter in a row, GDP per capita (which looks at economic growth per person) has actually fallen. This shows that while Australia as a whole is growing, individuals may not feel that impact, especially with rising costs of living. Interest Rates: Holding Steady In September, the RBA decided to keep interest rates on hold at 4.35%, with the next decision due in November. While the US recently cut rates, Australia hasn’t followed suit, and it’s unlikely we’ll see any rate cuts before Christmas. The RBA is holding off to ensure inflation is well under control, despite it being much lower than the peak in 2022. Inflation: Better But Still Stubborn Annual inflation hit 3.8% in the June quarter, slightly up from March. However, there’s good news: underlying inflation (which strips out the more volatile price changes) has been falling for six straight quarters, down from its peak of 6.8% in late 2022. That said, prices for everyday goods remain high, and the overall cost of living is still squeezing households. Households Are Tightening Their Belts With cost-of-living pressures building, many Australians are cutting back on things like travel and entertainment. Even grocery spending is down, with households trimming their food budgets by 1%. However, spending on household goods, like furniture and appliances, increased by 4%, which propped up discretionary spending overall. Housing Market: Prices Still Going Up The property market remains strong, with housing values continuing to rise across Australia, although at a slower pace than before. CoreLogic reports that the national Home Value Index rose by 0.5% in August and a further 0.4% in September. Despite the cost of living, demand for property remains high, which is keeping prices elevated. Jobs Market: Still Tight, But Productivity Is Falling Australia’s unemployment rate remains low, sitting at 4.1% as of June, which is historically strong. However, total hours worked rose only slightly, and productivity—measured by GDP per hour worked—fell by 0.8%. While jobs remain secure for many Australians, people are working more for less output, and this could become a concern for long-term economic stability. Global Outlook: Uncertainty Ahead Globally, central banks are starting to look at easing monetary policies, but it’s still unclear how much they’ll ease up. Ongoing conflicts in the Middle East, Ukraine, and northern Africa are causing further instability. Meanwhile, Asia’s economy, a key trading partner for Australia, is expected to slow in 2024, which could have a knock-on effect on our own economic growth. What It All Means for You For everyday Australians, the combination of high interest rates, sticky inflation, and rising living costs means it’s more important than ever to manage your finances carefully. Mortgage holders won’t see relief from rate cuts soon, and households should continue to be mindful of their budgets, especially with the cost of essentials like groceries and petrol still fluctuating. If you’re feeling the pinch, now is a good time to seek professional advice and ensure you have a financial plan in place that helps you navigate these uncertain times.