Friday, 8 September 2017

As the Focus Shifts to Living Expenses, Do You Really Know What It Costs to Live Well?

Most of us aren’t financially astute enough to know whether we have healthy spending and saving habits or not. Data released by the ASIC tells us that the average Australian family spends around $69,166 on general living expenses a year. Out of all the money spent each year, $10.5 billion goes towards personal care expenses, and $14.1 billion goes towards the purchase of alcohol! The numbers may come as a surprise to some, but it only shows us how unaware we are of our general spending habits. It is not surprising that it is becoming increasingly difficult for young buyers to break into the housing market to purchase their first home.

The truth is that many people don’t know how they’re spending the money they earn. It’s only when they see their outgoings that they realise they’re not doing well financially. Our guest contributor Sarah discusses how you can kick the vicious cycle by understanding your finances and changing your spending habits.

Understanding Your Finances
Consider using the tools and resources available on the ASIC website to stay on top of your finances. They teach you how to organise your money and build wealth. Although most people know how much they are spending on food, home loan repayments, electricity, and, telephone, it’s the other discretionary expenses that they fail to understand. According to a report released by the Commonwealth Bank, one in every three Australians is spending more money than they actually earn. The bank also revealed that 46% of Australians feel like they’re not achieving their financial goals. Many families wouldn’t be able to meet their monthly expenses if they were to experience a temporary loss of income.

Changing Your Spending Habits 
Although people want to improve their financial well-being, most don’t know how. One of the most important things to do is to be aware of both basic as well as discretionary expenses. Make a few lifestyle changes, if required re-finance your loan to reach those financial goals. If you’re hoping to enter the property market but can’t save enough for a down payment, you have to lower your expenses or find ways to bring in additional income. consider packing your own lunch and biking to work. Consider making and selling your own craft items to make some income on the side. You could even sew your own clothes to save money. Finally, if you can’t cut back on your yearly holiday, cut back on other leisure activities and impulse buys instead. Even if you’re a mid or high-income earner, budget your expenses so you don’t end up spending more than you can afford.

This doesn’t mean you shouldn’t enjoy life. Enjoy it by all means but within your limits by setting a budget and sticking to it, and making sure you make the most out of every dollar you earn. 

Till next time... save, save, save!

xox
Rani

About the Author
Sarah Miller writes about small business, finance and design from personal experience. For more thoughts and ideas, you can connect with Sarah on Twitter

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