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Cutting costs at home: How to reduce living expenses

Budgeting is hard at the best of times, let alone in this current environment. If you're tightening your belt, here are some simple ways to cut costs without missing out.  
Published 31 Mar 2020
Updated 29 Nov 2022
7 min read
Cutting Costs: What to Cut and What to Keep

Whether you’re facing job loss, reduced hours, slower cash flow or just predicting the wider economic impact to come, your budget is probably a little tighter at the moment. The solution? Cutting costs —but that’s easier said than done.

What do we stop? What new habits do we start?

Budgeting is hard at the best of times, let alone in this current environment. What you need is some easy and accessible advice to help you save money without giving up the important things in life.

If you’re tightening your belt, here are some simple ways to cut costs without missing out.

1. Make a budgeting framework

Cutting costs can feel overwhelming – and confusing. Before you start chopping up credit cards and unsubscribing from Netflix, you need a plan.

Drastically lowering one area of your budget is a recipe for disaster. It won’t be sustainable. Instead, you need to make a budgeting framework.

Find out where your money is going

Ask yourself, ‘Where does all my money go?’. Take the time to tally it up. Open a spreadsheet and some recent bank statements.

Then, make a realistic assessment of your monthly and spending categories and see where you can start cutting costs:

  • Living expenses. This includes your rent or mortgage and bills.
  • Transport. Car repayments, petrol, public transport tickets or bike repairs all come under this category.
  • Food. Count up your grocery bills, plus your take-away and dining out costs.
  • Tech and communication. Your phone and internet bills, plus any tech you’re paying off or have recently upgraded.
  • Essentials. Think insurance, medical costs and haircuts.
  • Health and wellbeing. This covers things like your gym membership, remedial massages and trips to the beauty salon.
  • Entertainment. Netflix subscriptions, concert tickets, events and the like.
  • Charity. Regular charitable donations or funds you use to support your community.

Prioritise cost of living expenses

The next task is to assess which of these categories is negotiable and which is not. This will vary for everyone. The following categories are those which, for most people, shouldn’t be overly cut down on.

File them as essential, and leave them alone.

  • Essentials.
  • Living expenses. Unless, of course, you want to move somewhere less expensive or change utility providers.
  • Charity. You might need to reallocate some of these funds, sure. But, as our economy takes a hit, so too will those causes you feel most passionate about.

With all that in mind, let’s take a look at the costs you can potentially cut from those less essential categories.

2. Review transport costs

More employees are returning to the office. Public transport is obviously the most economic option for commuting, but it’s not possible for everyone. If public transport isn’t an option, speak with your manager about working remotely more often to reduce fuel costs, or discuss whether a fuel voucher is possible as an alternative.

Longer public transport commutes can also be an opportunity to continue working from your laptop with an internet dongle. Consider travelling off-peak to reduce costs, and speak to your employer about the whether they can share or cover the cost of your data and dongle.

3. Eat out less

For most people, this will be the biggest category to find hidden savings in. The quickest fix is to cut down on eating out costs.

The average Aussie spends $52 on eating out every week. Understandably, that adds up. Pulling back on this is a simple cutting costs method. Can you start making coffee at home instead of getting takeaway? Can you limit yourself to one takeaway meal per week?

Need help when it comes to food and groceries?

In terms of groceries, here are a few tips to help you cut down on your spending:

  • As an Employment Hero user, you already have access to a 5% discount to Woolworths through My Benefits. Sign in to Employment Hero and click on My Benefits > Discounts in the main menu. Under Gift Cards you’ll find 5% off Woolworths discount.
  • Buy in bulk. Do the maths of how much you’ll actually need and purchase it once a month. This puts a stop to incidental purchases or hangry shopping habits.
  • Check the price per weight or capacity. Price labels on shelves tell you how much you’re paying per gram, kilogram or litre. Choose the item with the lowest overall price to get the best bang for your buck.
  • Shop around. If you’re a regular at the boutique health food store, now might be the time to try out a lower-budget supermarket. You might be surprised at the huge price variants across stores.
  • Go old school and look at the catalogue. Most grocery stores release a print or digital catalogue, showcasing their sales. Keep an eye out for a bargain. Some larger chains even have email subscription services to keep you up to date with their latest offerings.
  • Cook cheap. If you’re trying to stick to a budget, rib-eye steak might not be on the menu. Do some research into recipes which use cheaper ingredients. Chances are, your parents or grandparents will have the recipes for a few old family favourites which they used when times were tough. Recipes which use things like grains, root vegetables and cheaper cuts of meat are usually budget-friendly.

4. Shop around for tech and gadgets

Shopping around is key if you want to reduce your phone and internet costs. Start with a call to your current provider. Tell them you’re unhappy and are looking around. If you strike it lucky, they might just offer you a discount. If they don’t, it’s time to look further afield.

Comparison sites can be a great tool for this. For the sake of your budget, the quality of your plan might need to be downgraded. Or, perhaps you can even take a downgrade on your handset or laptop. If this is practical for you, it may be an easy sacrifice to reduce costs dramatically.

Just be sure to think through the implications of this on your work and social life.

5. Health and wellbeing

No matter your financial situation, your health should be a priority. So, this is one area to be careful in when cutting costs. FYI Employment Hero users can access discounts on health insurance from the likes of Bupa and Australian Unity, but there are other creative solutions to consider:

  • Change your $200 remedial massage every fortnight to a once-per-month appointment
  • Swap your gym membership for daily Youtube tutorials
  • Exchange your regular nail appointment for a DIY solution
  • Usually head to spin class? Swap it out for a real-life bike and hit the road.

With a little creativity and a few habit changes, your budget can be as healthy as your body.

6. Cut down on entertainment expenses

Now, let’s tackle the question we know you’re all asking. ‘Do I cancel my Netflix/Stan/Amazon Prime subscription?’. If you have multiple subscriptions, choosing just one might be a good solution. If you can split the cost with friends or family, even better. No one is making you cancel that subscription.

As Marie Kondo would say if you use it and it sparks joy – keep it. But if you’re seriously tightening your belt, it could be time to put down Netflix and pick up a book. A great way to keep the cutting costs ball rolling.

As for nights out, it may be time to limit these to monthly occurrences instead of weekly, or plan more cost-effective catch-ups like pizza and wine at home, or picnics in the park.

Free (or almost free) entertainment ideas

  • Commercial television streaming options (like ABC iView)
  • Write a letter
  • Try out a new recipe
  • Re-read an old book
  • Start a community group online
  • Bust out those board games
  • Learn a new language
  • Adopt a puppy…okay, we know this isn’t free but come on, so cute.

7. Use a budgeting and cost-cutting formula

It is inevitable that our budgets will shift as our lives change. Having considered where you can cut some everyday costs, it’s time to reformulate your budget.

There’s a helpful formula to keep in mind. 50/30/20

50% of your income should go toward basic necessities. This means things like living costs, food and healthcare. 30% of your income should go toward the future. Put it into savings. Invest it. Pay off debt.

Our Savings Tracker is an easy way to keep on top of this. 20% of your income is for all the fun stuff. This category is going to look a little different for everyone. You know what fun looks like for you.

This isn’t a magic recipe. It’s not going to save the day. But it might help you create a leaner budget. Once you’ve decided which costs to cut immediately, it’s important to think forward. What will your future spending and saving practices be?

The simple 50/30/20 formula could help you put healthy financial habits in place.

Take it slow and be kind to yourself

Now is not the time to make drastic life changes if you don’t have to. We’re living in a period of instability which is already causing heightened anxiety for many. Cutting costs should be helpful and not harmful.

Take it one step at a time and think carefully about what small changes you can make. Don’t sacrifice your wellbeing. Self-care matters and it should be part of your budget – whether that’s a subscription service, saving toward a holiday or treating yourself to the best ice cream money can buy.

Disclaimer: Nothing in this article is intended to be financial, legal or investment advice and should not be construed or relied on as such. Before making any commitment of a financial nature you should seek advice from a qualified and registered financial or investment adviser. This information relied on sources believed to be reliable and accurate at the time of publication.

The Team
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