With inflation and housing costs high in 2024, managing the cost of living requires a strategic approach, including budgeting, prioritizing needs over wants, and practicing smart shopping to stay in control of expenses.
As the year goes on, the challenges of managing the cost of living are more pressing than ever. Households are facing financial strain with inflation rates and consistent rise of housing costs. With this said, having a plan with your money is vital in staying on top of your bills and expenses, so you can feel empowered by your financial decisions.
Before we delve into some ways to reduce your cost of living, it is important that we understand the current landscape. Firstly, inflation rates have seen to remain elevated during 2024, with data from the Australian Bureau of Statistics stating that in early 2024 the inflation rate has hovered around the 4.2% mark. While this is a slight decline from 2023, this rate is still considered high and impacts everyday Australians.
As for the housing market, it can be said that mortgage rates are seen to be stabilising, however, the price of houses in urban areas remains at a high with median house pricing rising by 6% yearly (National Association of Realtors, 2024). Finally, information from the Australian Energy Market Operator (AEMO) suggests that energy costs, driven by increased demand and supply, are set to rise by another 5%. This will only be combatted by the government subsidies for so long, in turn creating further financial pressure to households.
Strategies to stay ahead
- Budget wisely: It might sound simple, but sticking to a consistent budget could be your saving grace. All you have to do is create a realistic and detailed budget to keep track of your income and expenditure so you know exactly when and where you are putting your money.
- Prioritise Needs over Wants: While it might be tempting to buy that luxury item, it is important to focus on your needs as opposed to your wants. Breaking things down into the 50/30/20 rule is an easy way to do this. 50% income for needs (bills, rent, groceries etc), 30% income for wants (eating out, entertainment) and 20% income savings.
- Practice Smart Shopping: Planning your grocery shop ahead can be a simple but huge help in cutting down those little costs. Whether it’s meal prepping for the week so you’re not tempted to eat out, choosing the less expensive brand on the shelf or buying grocery items in bulk, these are easy ways you can manage your spending.
By taking these tips and strategies into consideration, you will feel more in control of your spending decisions to stay on top of your living expenses in today’s current economic climate.
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