How to keep your family budget on lockdown

1 in 3 household finances take a hit due to COVID-19

Many families’ day-to-day lives have changed since COVID-19, and with more kids learning remotely, the stay-at-home lifestyle can easily drive up household bills and expenses. Close to a third (31%) of adults said their household finances had worsened between March and April this year[1]. To try and avoid any further financial blows, families should take control of their everyday bills and make sure they don’t overspend on the basics in the coming months.

Comparethemarket.com.au spokesperson Abigail Koch says: “Many Aussies are tightening their belts to help get themselves through these tough times. With so many people struggling to balance their budgets right now, it’s important to look at where you can make any savings across your household expenses.”

Comparethemarket.com.au[*] shares 7 tips on how to keep costs down with the family at home:

Understand your energy usage.

With a lot of households spending the majority of their time indoors, it’s likely that electrical appliances and equipment use (which makes up approximately one third of a household’s energy bill[2]) will go into overdrive. Hanging out the clothes can be a task best shared amongst the family, and you can save money as you do it! Opting to use a clothesline once a week over a dryer, can help you pocket approximately $79 a year[3]. Looking at your energy bill can unlock potential savings too. Families that are home during the day or on weekends and avoid using large appliances such as a dishwasher in the evenings, may benefit if they have a time-of-use tariff plan, which means you pay cheaper rates for using energy during ‘off peak’ times[4]. Having a smart meter installed may help you and your energy retailer better monitor your energy habits and receive an accurate reading of your usage, to see if it fits within these off-peak times. Speak to your energy retailer about whether recalibrating your existing, or purchasing a new smart meter could make additional plans become available to you[5], and help you save on your bills.

Save on shopping.

The start of 2020 has seen consumer anxiety rise, with the price of groceries the biggest factor adding to Australians’ cost of living pressures[6]. A lot of families need to plan additional at-home meals, potentially on tighter budgets, so any discounts applied to your grocery shop can help your hip pocket. When it comes to paying for your weekly shop, major grocery stores like Coles and Woolworths have free online catalogues you can subscribe to, which grants you the first look at the specials before the brochure hits the shelves, to help you plan, shop and save.

Be water smart.

Families are being urged to practice good hygiene habits, however rigorous hand washing and cleaning of frequently used surfaces[7] could cause families’ water usage to jump. A running tap can waste up to 17 litres per minute, so make sure your family doesn’t keep the tap running when not in use[8]. A family of four can save approximately $111 a year by turning their tap off when brushing their teeth[9].

Check if you’re eligible for rent or mortgage assistance.

Rent or mortgage payments can be an added financial burden for families trying to make ends meet. For renters, find out whether the state or territory you live in is offering rental grants and subsidies to assist if you have lost your job due to COVID-19, and cannot access other financial help. This can include a one-off maximum payment of $2,000 in Victoria, Queensland and Western Australia, paid directly to your landlord[10]. For homeowners, you could shed hundreds off your mortgage by switching to a lower interest rate home loan. For someone who took out a $500,000 principal and interest home loan with a 30 year term with an interest rate of 3.99%, they could save $279 a month by refinancing their loan under the same arrangement, simply with a 2.99% interest rate[11]. When considering refinancing, it’s best to speak to an expert. Compare the Market’s trusted brokers can help you understand your current loan obligations and if any potential fees or break costs could apply to you.

Limit buying extra school supplies.

Parents with kids staying home from the classroom could be tempted to buy equipment or materials typically reserved for schools or child care. While it might be tempting to buy a few extra school supplies, it’s important to remember these purchases are not tax deductible[12], unlike select job expenses if you’re required to work from home. Also if parents are struggling with school costs, they should speak to the school directly as most have financial assistance programs available to assist families in need[13].

Reduce child care costs.

The government has provided some short term relief with free child care for working parents until Sunday 28 June, to help children remain enrolled in, and attend child care as needed[14]. Over half (51%) of Australians are working less hours due to COVID-19, and for those in this situation, it’s important to remember once child care fees are no longer free, parents may be eligible for a higher subsidy on their child care costs if their combined family income has reduced[15]. By comparing child care services in your area, you can see how charge fees, additional expenses of supplied meals and nappies, opening hours and more could be impacting your budget, and consider if you can negotiate costs.

Save on household bills.

Parents are likely to be more time poor with kids staying home however to help stop the bills from rising, pick one insurance, energy bill or bank statement at a time and compare this alongside other providers to see if you’re still on a competitive rate. Comparethemarket.com.au can help you compare more than 1,000 products from over 100 brands all in one place.

References:

[*] Compare the Market https://www.comparethemarket.com.au/energy/

[1] Australian Bureau of Statistics 4940.0 – Household Impacts of COVID-19 Survey, 14-17 Apr 2020 https://www.abs.gov.au/ausstats/abs@.nsf/Lookup/4940.0main+features114-17%20Apr%202020

[2] Australian Government Your Home Australia’s guide to environmentally sustainable homes – Appliances https://www.yourhome.gov.au/energy/appliances

[3] Australian Government Department of Industry, Science, Energy and Resources – Reduce energy bills https://www.energy.gov.au/household-guides/reduce-energy-bills

[4] Australian Government Energy Made Easy – Which type of tariff is right for you? https://www.energymadeeasy.gov.au/article/electricity-tariffs/

[5] Australian Government Energy Made Easy – Be meter smart: your rights when getting a smart meter https://www.energymadeeasy.gov.au/hot-topics/be-meter-smart-your-rights-when-getting-a-smart-meter

[6] NAB Australian Consumer Anxiety Report Q1 2020, page 7 https://business.nab.com.au/wp-content/uploads/2020/04/NAB-Consumer-Anxiety-Report-Q1-2020.pdf

[7] Australian Government Department of Health Good hygiene for coronavirus (COVID-19) https://www.health.gov.au/news/health-alerts/novel-coronavirus-2019-ncov-health-alert/how-to-protect-yourself-and-others-from-coronavirus-covid-19/good-hygiene-for-coronavirus-covid-19

[8] Victorian Building Authority – Saving water https://www.vba.vic.gov.au/consumers/water-use/saving-water

[9] Urban Utilities – How low can you go https://urbanutilities.com.au/howlow

[10] Housing Vic – Coronavirus (COVID-19) rent relief grant https://www.housing.vic.gov.au/help-renting/rentrelief
Queensland Government – Apply for a COVID-19 Rental Grant https://www.qld.gov.au/housing/renting/rent-assistance/bond-loan/covid19-rental-grant
Government of Western Australia Media Statement – New $154.5 million relief package to support tenants, landlords and construction industry https://www.mediastatements.wa.gov.au/Pages/McGowan/2020/04/New-154-point-5-million-dollar-relief-package-to-support-tenants-landlords-and-construction-industry.aspx

[11] Money Smart Mortgage Calculator accessed May 2020 https://moneysmart.gov.au/home-loans/mortgage-calculator

[12] Australian Taxation Office Frequently Asked Questions https://www.ato.gov.au/General/COVID-19/COVID-19-frequently-asked-questions/Individuals-frequently-asked-questions/#Athomelearningexpenses

[13] Money Smart – Reducing back-to school costs https://moneysmart.gov.au/reducing-back-to-school-costs

[14] Australian Government Services Australia – Families https://www.servicesaustralia.gov.au/individuals/subjects/affected-coronavirus-covid-19/if-you-already-get-payment-from-us/families

[15] Australian Government Department of Education, Skills and Employment Child Care Subsidy – combined annual family income https://www.education.gov.au/child-care-subsidy-combined-annual-family-income-0