The Australian Bureau of Statistics latest spending survey results are out and there are a few surprising findings.
On average, Australians have a total weekly expenditure of approximately $1,425 (that’s $190 more than six years ago).
If you are trying to cut down on electricity costs, you may be surprised to know that it is likely you are paying on average the same for electricity today than what we were paying 30 years ago.
Out of our approximate weekly spending bill of $1,425, we only pay $41 for gas and electricity. So where does the rest of our money go?
Here is a breakdown of our key spending groups:
- Housing: 19.6%
- Food and non-alcoholic drinks: 16.6%
- Transport: 14.5%
- Recreation: 12.1%
- Medical:8%
- Household furnishings and equipment: 1%
- Communication:3%
- Gas and electricity (domestic fuel and power): 9%
Since the last survey of this kind in 2009-10, some of our spending habits in certain groups have increased. Some spending habits have decreased, and other areas have remained the same. For example, we are spending slightly less on food and drink now than what we were 6 years ago.
We are spending slightly less on household furnishings, and pretty much the same on communications (including internet and phone costs).
The biggest leap weekly spending relates to housing. Housing expenditure accounts for 19.6% of our weekly spending bill. This is 1.6% more than just 6 years ago.
Looking at these figures it becomes clear that the biggest and most effective area for household saving is in housing. Here are some strategies to save on housing costs:
If you are renting:
- If you are renting alone or with a partner consider cutting your housing costs by having a housemate rent another room. Or move into a share house yourself.
- Move to a cheaper area. Yes, you may have to sacrifice some lifestyle choices, but it doesn’t mean your life will change that much. For example, the median weekly rent for a 2-bedroom unit or apartment in Melbourne CBD is $575, a 2-bedroom unit or apartment in Box Hill is on average $375* – you can get to Melbourne CDB from Box Hill in under 30 minutes. Relocation can lead to big savings.
- Move home with your parents or another family member. In this situation, you may pay little to no rent, you could help with the bills, and you may be able to save for a home loan deposit sooner. Your family may even help you enter the property market with a guarantor loan.
If you own your home:
- If you have a spare room rent it out or use a holiday accommodation service like Airbnb. Many travellers, people on working holidays, or even locals, want a room to rent in a friendly house. You can benefit financially and put the extra money into your mortgage or something for yourself.
- Consolidate your debts into your mortgage. Your mortgage is most likely your biggest debt and it is likely to have the lowest interest rate. If you have multiple credit cards or smaller personal loans you can end up saving thousands in interest by consolidating your debts into your home loan. However, refinancing to consolidate debts is not a strategy you should use frequently as it may extend the life of your mortgage. It’s a good strategy to improve cash flow allowing you to change spending habits for the better.
- Find a better rate on your home loan. You hear this time and time again, and it’s for good reason. Whether you have good or bad credit there are literally hundreds of products in the market. A different product may lead to big savings. Refinancing for a better rate pays off in the long run. The best way to find a better rate is to talk to a mortgage broker.
We spend so much time trying to cut back spending at the grocery store and on our bills. Next time you are working on your budget or trying to find new ways to save, look at your housing situation and ask yourself if there is anything you can do to make and big and immediate savings.
You can find the full results of the 2015-16 housing expenditure survey here: http://bit.ly/2xy7XF1
*Median rent data for Melbourne CBD and Box Hill is from realestate.com (21/09/2017).