5 Budget-Friendly Ideas for Reducing Your Cost of Living

Bryce: [00:00:31] Hello everyone, welcome back to another episode of Get Started Investing feed podcast, where we attempt to answer the most common money and investing questions straight from you guys, the Equity Mates Community. If you are joining us for the first time, welcome. We strongly recommend that you scroll up and started episode one. Now, while we are licensed, we are not aware of your personal circumstances. Any information on this show is for education and entertainment purposes and any advice is general. With that said, my name is Bryce and as always, I'm joined by my equity buddy, Ren. 

Alec: [00:00:58] How are you? I'm very good, Bryce. Very excited for this episode. We are answering a question that is on the tip of a lot of people's tongues. How can I reduce my cost of living? 

Bryce: [00:01:09] That's it. Ren. Cost of living is on the tip of everyone's tongue. And we have a question here from Stuart.

EM Community: [00:01:14] Hey, Equity Mates. The cost of living is skyrocketing at the moment. I'm just curious about what your best ideas are for reducing the cost of living. We'd love to hear your takes. 

Bryce: [00:01:22] Well, firstly, thank you to Stuart for the question. Please keep the questions coming as we can answer them week on week here and get started investing. But again, the way I think about easing or tackling cost of living pressures is in two buckets. One, reduce expenses to increase income. 

Alec: [00:01:40] This is feeling like a $100 challenge episode. 

Bryce: [00:01:42] I know it all well, you know. Yeah. Yeah. It all contributes. 

Alec: [00:01:45] Yeah. And I think the message from that series that we're doing really carries through here, which is just the smallest differences that you can make, really do add up over time, whether it's to get money into the household budget or get money into the markets, it's yeah. 

Bryce: [00:02:03] It all makes a difference. 

Alec: [00:02:04] So you've really driven the this episode and you have given us five key categories to reduce expenses based on the five biggest cost or biggest line items in the Australian household budget. 

Bryce: [00:02:20] Yeah, I've tried to link some, but I for me, when you think about reducing expenses and the exercises that I've done in my recent sort of budget reviews, you know, the $100 challenge we're looking at sort of the $100 mark and below when you really do want to make a difference, I believe that you want to be looking at just like when, you know, running a business and whatnot, you want to be looking at your biggest line items to try and make significant impact. Now, there's nothing wrong with addressing small, but starting with your biggest line items in your budget is obviously where you're going to get the biggest bang for your buck. Data shows that the five biggest line items for Australian households are as follows: Housing is obviously number one, that's rent, that's mortgage payments, whatever it may be. On average takes between 20 and 35% of household income or budget. 

Alec: [00:03:06] If someone's just paying 20% of that, how are they doing very well. Isn't the personal finance rule of thumb. You want to be shooting for a third or less. 

Bryce: [00:03:15] You want it's really 30%. 

Alec: [00:03:17] Yeah, and that's really tough in Australia. 

Bryce: [00:03:19] Yes, super. Yeah. Particularly in capital cities, it's very difficult. Housing, food is number two. That's takeaway, that's restaurants, you know. So yeah, number three they've put together is recreation, culture and transport. Number four is insurance and financial services, and number five is health. 

Alec: [00:03:40] Any thing that you think is missing from your personal budget, No cigarettes. 

Bryce: [00:03:48] Dude, that's a recreation. 

Alec: [00:03:51] For those health. 

Bryce: [00:03:53] No, I mean, a lot of my stuff fits into that. I mean, they're pretty broad, to be honest. 

Alec: [00:03:59] Gambling. 

Bryce: [00:04:00] Recreation, culture. 

Alec: [00:04:04] Yeah, I feel like that is probably mine as well. Although insurance is in number four, I don't know what health. I'm like, I'm not going to the doctor. 

Bryce: [00:04:16] I Think it is that. 

Alec: [00:04:17] Yeah. But I guess we're sort of we're on the cusp of getting old and needing more health spending. 

Bryce: [00:04:24] Yeah, not quite. But anyway, anyway. 

Alec: [00:04:28] You're back Goes. It goes. 

Bryce: [00:04:29] Let's just go through some simple ways to reduce costs to start with. And I think rent housing I think is quite difficult. It goes without saying, you either have your mortgage payments or you're renting. And the only way really to reduce that is to either downsize or find a cheaper rental, which in this market is obviously very difficult to do. And there's a lot of costs involved with switching accommodation. So not going to address the housing side of things, but food I think is one where you can make a difference. I was asking my wife last night where we have felt the biggest cost of living pressure and I think definitely is our shopping. Each week we've noticed that our we're not buying two different two different things, but our what we're spending is definitely going up. So we buy as our number one I think is obvious, but buy bulk and just buy what you need. We go to the shop with a list and it's the list only.

Alec: [00:05:19] Aren't those two things mutually exclusive? Buy bulk and just buy what you need. 

Bryce: [00:05:24] Well, I mean, it's like we need toilet paper. 

Alec: [00:05:27] So get by like $400. I don't buy paper towels as well. 

Bryce: [00:05:31] Exactly. Yeah. Yeah. Or it's like buy on special. Like if you, you know, we use, you know, two two things of dishwashing liquid a month if they're on special, get on it buy more. So it's kind of just buy what you need buy bulk. But I think one thing that I try and do is actually and this is something I learnt probably while we were in Woolies and Coles is to actually check the per kilogram price instead of the displayed price. You can easily fall into a trap of buying the cheapest unit price, say of cheese for example. But if you go the extra 200 grams or 500 grams, you're actually spending less per per kilo. And that's where the real price lies. So something to keep in mind, bit of a tip if you have a choice between unit price buy on the per kilo.

Alec: [00:06:20] Nice. Yeah. Obviously the ubereats and milk run or milk run doesn't exist anymore. But the those costs just blow out. I think you've pulled a stat here. The average Australian spends $45 a week on food delivery. That's over two grand a year. I was when I was living in a share house. It was definitely above that line. I've fallen below that line. I am feeling the difference in my spending. 

Bryce: [00:06:50] I Think on that as well. Just walk up and get it. If you can't, don't pay it. 

Alec: [00:06:52] So I mean, when you're ordering food delivery, you're not you're not in the state to walk up and get it. 

Bryce: [00:06:59] Anyway, So let's say you've gone to Woollies and Coles and you've bought per kilo instead of the displayed price, you've probably got a receipt and on the bottom of all the receipts you have a fuel discount. Now this moves into transportation and hack number two. This is something that we don't do enough at night, but it's actually using the $4 per litre, saving $0.04 saving at the petrol station. 

Alec: [00:07:26] Right. 

Bryce: [00:07:26] So with Woollies, if you spend 30 or more, you get 4.4 cents per litre at participating fuel centres. 

Alec: [00:07:36] You own a Honda Jazz. You've done the work on this. 

Bryce: [00:07:39] Yeah, I did the work thinking that it would be actually a decent saving. It's marginal. 

Alec: [00:07:44] Give us the numbers. 

Bryce: [00:07:44] So the Honda Jazz has a 40 litre tank. Our current pricing where we live is a dollar 90 a leader, so it's about 76 bucks to fill it up, 40 leaders at $0.04 per litre saving. That's a saving of $1.60. 

Alec: [00:08:02] So a $1.60 over 76 is a percentage saving of 2%. 

Bryce: [00:08:07] Okay, I'll take it. I'll take it. I then had to look at the numbers and we are very much on the lower end of frequency of filling up. Yeah. And obviously on the Honda Jazz has a pretty small fuel tank. So for those that are filling up once or twice a week, you know, this probably becomes a little bit more meaningful over a long period of time. 

Alec: [00:08:27] Yeah, I have done the ultimate transportation hack. Which is sell my car and embrace the bus.

Bryce: [00:08:34] Nice. 

Alec: [00:08:34] Yeah. And I was not I was a bit apprehensive at first where I was moving. There was a chance that I'd have to do two buses and I was pretty off that. But I've, I've embraced the public transport life and I cannot speak highly enough about it. The amount of stuff you can do, the only exception is if you're in like peak peak hour and then you can't get a seat and it's crowded and that sucks. But you know, like catching up on podcast. Yeah, you know. Yeah. Just doing whatever. Yeah, yeah, yeah.

Bryce: [00:09:07] Didn't you tell me you cut up your opal card and free, right? 

Alec: [00:09:11] You obviously have lost touch with the common man. Haven't been on public transport for a while. Yeah, you don't need an opal card and you just tap your credit card. 

Bryce: [00:09:21] All right, Ren. Well, number three, in terms of buckets is recreation, culture spending. 

Alec: [00:09:25] Sorry, I just have noticed that you put another point in here. Uber versus walking. Yeah. So, you know, you can save money if you just walk. 

Bryce: [00:09:35] Well, my my. My general rule of thumb is, if it's a sub 30 minute car ride. 

Alec: [00:09:39] I'll walk some 30 minute car. No, Don't you mean a sub 30 minute walk? 

Bryce: [00:09:42] Sorry, sorry, sorry. Yes, some 30 minute walk. 

Alec: [00:09:46] That's why you're so late to everything. 

Bryce: [00:09:49] Yeah, it's a sub one case. I walk. 

Alec: [00:09:52] All right, so that's food, That's transportation. Now, we're not really breaking any new ground. 

Bryce: [00:09:57] But it's a reminder. 

Alec: [00:10:00] Which is that, like the savings hacks that everyone is like they're all out there. Yeah. The challenge is and this is me speaking personally, I don't have the discipline to actually do it. Mm hmm. So maybe I will. 

Bryce: [00:10:13] Yeah. Well, the next one. How much do you spend on your phone bill? 

Alec: [00:10:17] 45 bucks a month. 

Bryce: [00:10:18] Nice. Nice. So you've paid off your phone?

Alec: [00:10:22] I bought it outright at the store. Yeah, because there's all you can run the numbers on this. And especially when I bought it for a tribe hi fi. And they have all these deals where, if you like, sign up to a Telstra plan, you get X dollars off the phone itself. And so I did the numbers and it worked out that buying it outright. And then the plan was I would end up paying less than just paying for the phone and the plan each month. 

Bryce: [00:10:48] So this one relates to the phone. And just like you can shop around insurance, you can shop around energy, you can shop around interest rates, you can shop around your mobile. Now, I know that there was an annoyance with porting your number and keeping your number between providers when I used to work at Telstra. It took a couple of days and was quite irritating. The tech now is great. You can put in a number instantly. You can be up and running pretty quickly and have no real friction. You can shop, you should be shopping around your mobile and particularly looking at prepaid yearly plans. 

Alec: [00:11:25] Going back to the days of the phone. Yeah. 

Bryce: [00:11:27] Now Kogan has its plans called the Kogan 365 days for $199 you get unlimited calls and texts which is pretty much. 

Alec: [00:11:37] Under $199 a year. Okay, that's important. 

Bryce: [00:11:40] $199 a year upfront, prepaid. You get unlimited calls and text, but that's par for the course. Whatever. You get 500 gigs. Now, my plan I don't know what yours is, but I get 40 gigs a month. Really, really go over it because the wi fi being everywhere. So 500 gig actually nets out at about 40 gigs a month as well. So for $199 you get pretty much what, what my plan is on Telstra for $53 a month at six and then $199 nets out at $16 a month. So I think there's nothing there's no harm in shopping around your mobile, the equivalent on Telstra. If you're to do a prepaid, there's is $40 a month. So have a look at some of these other providers. People were like, Oh my God, it's Kogan, it's going to be wrong. It actually it's using the Telstra network. He just comes in and across the top. So $16 a month for what is a normal phone plan. You just need to just get upfront 199. 

Alec: [00:12:40] You just get spammed by Kogan emails to the same guys. Yeah. 

Bryce: [00:12:43] Yeah, I get that already. So shop around, New plan then, Ren. I think a final one before we have a look at maximising income is just leveraging the cashback opportunities. Now I know I know a lot of people in our community do do this. I never do it because for some reason it feels annoying.

Alec: [00:13:00] I feel. Yeah, so yeah.

Bryce: [00:13:02] It feels irritating. But I saw Queenie, who you may have seen on Tik Tok. I saw her point.

Alec: [00:13:07] He's actually guest hosting this podcast with me next week. 

Bryce: [00:13:11] Epic will show it. She'll be on. But we recently grabbed a coffee with her and she did cashback on the coffee just through her Cashback app. So for those that have just joined what is cashback, you can sign up to cashback or real cash reward programs where there are retail partners all throughout Australia, both online and in brick and mortar. And when you go and buy something through these cashback apps, they then reward you by giving you literally cashback based on a percentage of that transaction. So it might be you buy a coffee for five bucks and they'll give you 2% cashback. 

Alec: [00:13:44] And the business model is basically they essentially referring to the organisation and then they basically split that commission with Yeah, that's kind of the model. 

Bryce: [00:13:55] Yeah, yeah. In small doses like Amazon has 7% cashback, which I thought was pretty good.

Alec: [00:14:00] You can do it through Amazon. So if you go through. 

Bryce: [00:14:03] If you go through cash rewards or cash or shop back Amazon, Woollies, the iconic like a lot of your big retailers are on there, the thing is you just need to go through. Through these interfaces, through cash rewards or shopback or whatever it may be. But if you find yourself saying, oh, a 10% discount, you also get the 7% on top and it can really add up if you play the numbers and spend the time. I think that's where it becomes a little bit arduous. But if you do spend the time, it is worth it. So cashback is number five. 

Alec: [00:14:34] I saw Booking.com. I don't know if it was just temporary, but they were on one of the shopback or cash rewards or one of them, which is pretty good. Like if people can travel and you're booking. Exactly. Hotels and flights. 

Bryce: [00:14:46] Yeah. 7% on a you know a couple of hundred on an international hotel. Yeah that's up. 

Alec: [00:14:51] So we've almost out of time, Bryce. There are two bonus recommendations that you have here. One is just use half the recommended amount of laundry products. Oh yeah, that's a shop assistant. And secondly was just don't use toothpaste. 

Bryce: [00:15:09] Wrong. No, don't wash. 

Bryce: [00:15:13] Yet. Don't you know the second one was use private browsing when booking travel. Because your cookie, the airlines are really good at knowing when you've looked at an airline and looked at prices and guaranteed your cookie will be tracked. And when you come on next time, the price is going to be slightly higher. Yeah. So use private browsing so they can't track you. 

Alec: [00:15:32] But yeah, now you've just got me thinking. Sorry, I know this is a bit of a handbrake, but the recommended amount, half the recommended amount of laundry products like this just apply to heaps other areas.

Bryce: [00:15:43] Oh all of that stuff, all of that. The washing powder in there. Well that's dishwashing liquid because they were like high concentrate. 

Alec: [00:15:52] We just used the tubs like the ones in plastic, you know. 

Bryce: [00:15:57] We don't have a dishwasher. Handwash saving. Actually they say it's more water efficiency as a dishwasher. 

Alec: [00:16:04] Honestly, once you get a dishwasher you'll never look back. I know it's a real luxury. 

Bryce: [00:16:11] It's a must have on our list of buying a house. 

Alec: [00:16:14] So what else are you. Could you just get one installed? 

Bryce: [00:16:17] Yeah. Yeah, that's what we mean. There's no point us installing one in a rental. But when we're all. 

Alec: [00:16:21] Right, when we buy, it's going to say, like, don't pay overs for a house you don't like. Just because.

Bryce: [00:16:25] We're looking at one now that has two. 

Alec: [00:16:27] Too many unnecessary $100 challenge. Sell one. 

Bryce: [00:16:32] That's good. That's good. That's my next time. Anyway, we digress. I'm going to wrap it and just say that there are plenty of things that you can do. Have a look at your biggest line items in your budget to start with. And if you can't make a meaningful difference on some of them, then making small differences on a lot will help with reducing your expenses and contributing to, I guess, reducing your cost of living. So please keep the questions coming. And please, if you could share this episode, tell a friend who is looking to improve their budget and reduce their cost of living and join in next week as Wren sits down with a guest host Queenie, to discuss, Are rewards programs worth it? But then we'll pick it up next week. Well, you and Queenie.

Alec: [00:17:13] Well, sounds good.