Five ways to save money this new financial year
Rachel Cary, Property and Finance Reporter
First published 15 July 2022, 10:49 AM
It’s been a turbulent start to the new financial year for anyone hoping to save a bit of money.
Inflation is already high and the Reserve Bank of Australia expects it will hit 7% by the end of the year, meaning everyday essentials like food, electricity and even your daily flat white could become more expensive in the months ahead.
The cost of living has surged in 2022, adding pressure to household budgets. Picture: Getty
To try and bring inflation down the RBA is in the midst of a cash rate hiking cycle, raising interest rates for three months in a row and flagging more hikes are on the way. Many property owners will have to absorb that cost as lenders pass on the higher rates to variable loan customers.
While that’s helped to push up interest rates on some savings accounts, it’s unlikely to offset the higher living costs households are up against.
We spoke to some industry experts to find out some of the best ways households can get ahead on their savings goals this financial year.
1. Start now to maximise next year’s tax return
If you have an investment property and you’re on top of your record keeping, pat yourself on the back and skip to the next tip. But for everyone else, now is the time to make changes that can help maximise your return for next year.
Senior manager of tax policy at CPA, Elinor Kasapidis, says given the Australian Taxation Office announced it was focusing on rental property claims last financial year, it’s likely they’ll do exactly the same this financial year, so it’s important to get it right.
“The start of the financial year is always a good time to make some new financial year resolutions and for property investors one of the key ones really is record keeping,” Ms Kasapidis said.
“The ATO does have apps that you can keep your records throughout the year which does make things easier for you and your tax agent come the 30th of June.
“Look at whether you’re keeping [records] manually or whether you can change to a digital environment, and whether you’re keeping receipts and invoices for all those little expenses that investors will accumulate throughout the year.
“Because if you can’t prove it you can’t claim it.”
Better yet the ATO’s record keeping app, myDeductions, is free.
2. Run a home loan health check
With interest rates rising it’s important to ensure you’re getting the best deal possible on your home loan to maximise your savings.
And it appears many mortgage holders are already realising this. Refinancing activity is close to a record-high, data by the Australian Bureau of Statistics shows, as people seek to get into a better financial position ahead of future rate rises.
The latest lending data found the total value of external refinancing in May was 16.6% higher than it was a year ago. The value of refinancing for owner-occupiers hit an all-time high during the month.
For borrowers on variable loans who are in a position to refinance, it’s worth having a look around to make sure your rate is the best you can do.
In a changing rate environment, Mortgage Choice national sales director David Zammit said it’s particularly important to have someone proactively managing your home loan to ensure you’re not paying more than you need to be.
“Looking ahead, Australians can expect home loan interest rates to rise further as the Reserve Bank continues to normalise the cash rate,” Mr Zammit said.
“I encourage borrowers to get ahead of the next rate hike and speak to their mortgage broker to ensure they’re on the best loan they can access.”
Borrowers who are waiting for their fixed terms to end can relax for now, but are being warned to pay attention to when those terms expire and renegotiate fast to minimise the financial shock that could await.
3. Check your insurance
You can insure almost anything, your car, your health, your home (inside and out) and even your pet poodle.
CHOICE Editor Marg Rafferty says all those policies add up.
“Insurance is that classic grudge purchase,” Ms Rafferty told Mortgage Choice.
“We don’t really want to spend it but we know that we’ll have a bit more peace-of-mind if we do.”
CHOICE says households can be slugged with an insurance ‘loyalty penalty’ if they don’t shop around. Picture: Getty
Ms Rafferty says policy holders should be aware they have options. Analysis by CHOICE found private health policy holders could save hundreds of dollars a year on coverage if they switch from a more expensive option to a less expensive policy that still offers similar cover.
“For things like car insurance and home insurance we know that there is something that we call a ‘loyalty penalty’ where if you stick to the same insurers over time and aren’t proactive in looking around for better deals you may end up paying more,” Ms Rafferty said.
“It’s good to shop around. Each time things come up for renewal there’s no harm in looking and seeing if you can get a better deal to still get the coverage you want and pay less in premiums.”
4. Utility shop
Just like insurance, keeping an eye on your gas and electricity providers can pay off, especially with energy prices skyrocketing along the eastern seaboard.
“When we last did a look at shopping around for energy, most people will find that there’s deals on offer and it pays to shop around periodically,” Ms Rafferty said.
“Having said that, a lot of the different energy retailers have paused new customers just while the rates were so high but that is changing all the time so it is still good to shop around and see if you can get a better deal.”
Right now Victorians can score $250 just by comparing energy providers through the state government’s comparison website.
And regardless of which energy provider you go with, Ms Rafferty says you can save hundreds of dollars a year by switching power off at the wall as often as possible.
5. Supermarket savers
The key tip from CHOICE when it comes to saving at the checkout is don’t shop on autopilot.
“If you pay attention at the supermarket and look at things like what are the specials, what’s the unit pricing of the shelf telling you, compare different brands and products and there are opportunities to save,” Ms Rafferty said.
“When we looked at super market brand products and did our most recent comparisons we found possible savings of up to 40% if you switched.”
Ms Rafferty adds while convenience is good, consumers can expect to pay a premium for it.
“For things like pre-cut food and veggies they can cost up to five times as much per kilo as unprocessed versions,” she said.
And finally, a bonus tip that could hit the coffee-drinkers among us hard.
“If you buy a takeaway coffee everyday that adds up to $3000 a year,” Ms Rafferty said. “So maybe you could save a bit by not buying a coffee.”
