10 tips for budgeting in a cost of living crisis

Fuel, groceries and electricity prices are going up. Rent and mortgage payments are more expensive than ever – and when did coffees become $6?! 

If you’re feeling the squeeze of the cost of living crisis, you’re not alone. We recently explored why the cost of living has risen so significantly, and now it’s time to talk about how Australians are budgeting in a cost of living crisis. We’ve also got some tips for how you can keep more money in your pocket and make ends meet —without sacrificing the necessities.

What is a cost of living crisis?

A cost of living crisis occurs when the cost of essential things like housing, food, healthcare, education, and transportation goes up a lot, making it really hard for people to afford them. 

Prices keep rising, but the average income doesn’t go up in proportion to these price increases. It becomes tough to make ends meet and have a decent quality of life. This affects everyone, from low-income earners to the middle class and even people with higher incomes. 

A cost of living crisis happens when things get so expensive that it’s hard for people to afford basic necessities. For example, housing can become unaffordable, healthcare costs can go through the roof, and even basic needs like food and transportation can be too expensive. This can make it really tough for individuals and families to have a good life and make ends meet. It can also create bigger problems like inequality and social unrest. 

So how is a cost of living crisis solved? Governments and leaders need to take action to control prices, increase wages, and help those who are struggling the most.

Why is the cost of living in Australia going up?

According to the Australian Bureau of Statistics (ABS), living costs in Australia have been going up because things like transport and housing have become more expensive.

With both transportation and housing costs going up, the overall cost of living in Australia has increased. This means it’s becoming harder for people to maintain the lifestyle they want because they have to spend more money on these essential things. 

And when these expenses go up, it can make it tougher to afford other necessities like healthcare, education, and food.

[Read more: Why is the cost of living going up in Australia?]

How are Aussies dealing with the cost of living crisis?

We partnered with YouGov to survey 1,500+ Australians about Australian financial behaviours, and we found that:

3 in 4 Aussies have trouble budgeting  The majority (73%) of Australians have difficulty budgeting, with 3 in 4 saying it’s hard to budget for a whole month as they don’t always know what expenses might arise. Families with children under 18 at home, and Gen Z are the most likely to struggle to stick to their monthly budgets.	Unexpected expenses hit the wallet hard Almost 1 in 10 (9%), or approximately 1.1 million Australians, are struggling to make ends meet as the cost of living rises. And 23% of Australians —about 2.8 million — admit that they make just enough money to cover their regular expenses, and would struggle if unexpected expenses came up.
90% of Aussies have outstanding short-term debt A staggering 90% of Australians have outstanding short-term credit debt, amounting to almost $38 million owing in debt Australia-wide. The average amount of debt per person is $4,331.	Late financial payments lead to long-term headaches More than half (51%) of Australia has missed or been late on a financial payment, which can result in significant additional fees and charges. It’s concerning that of this group, 37% (or 2 in 5 people) miss or are late on financial payments at least once per year.
Money stress takes its toll Stressing over finances can cause serious damage to Australian lives, with over 7 in 10 (72%) experiencing negative emotions or behaviours —like a lack of motivation, losing sleep, and binge habits —as a result of their financial situation.	Cost of living pressures rise Almost 1 in 2 (46%) of Australians struggle to pay for regular expenses like rent and food before payday. 18% say this happens often, and 28% say that they are sometimes unable to pay for expenses like rent, food and transport before their regular paycheck.

These findings tell us that many Australians are finding it tough to manage their finances. The high cost of living is squeezing their budgets and making it harder to make ends meet. It’s forcing them to be really careful about where they spend their money —and it often means sacrificing things they would like to do or save for.

Swag Tip: It’s not all doom and gloom. If you’re struggling to make ends meet after an unexpected bill or expense, we’ve got a solution for those unplanned emergencies: Instapay*. It’s our Earned Wage Access product that lets you access the money you’ve already earned whenever you need it, without credit, interest or late fees —just a $3 drawdown fee into a Swag Spend Account, or $4 into an external bank account. InstaPay gives you the ultimate flexibility and control over your cash flow. No more worrying about sudden financial hiccups or anxiously waiting for payday. With InstaPay, you’re in charge, living life on your own terms. 

How can budgeting help during a cost of living crisis?

Budgeting: some of us love it, and some of us hate it. But everyone can agree that when followed properly, budgets get the job done. Here are three ways budgeting can help during hard times:

Prioritise the essentials

Budgeting helps you get a grip on your expenses and figure out what’s truly important. You can focus on the things you need most, like housing, food, and healthcare. By giving priority to these essentials, you can make sure you’re taking care of the important stuff even when times are tough.

Swag Tip: You can use Swag Stash accounts to ‘stash’ away parts of your pay towards essentials like rent, healthcare and groceries. Once you’re paid, the money automatically goes into these stash accounts, without you having to think about it! Automating as much of your budgeting as possible makes it easy to stick to your goals (and avoid unnecessary spending while you’re trying to save). 

Keep your spending in check

You can easily keep an eye on where your money is going and control your spending. You’ll get a clear picture of how much you’re spending on different things, which can help you cut back or make adjustments to save more for what you really need. It’s all about being smart with your money and making it stretch as far as possible.

Explore cost-saving strategies

When you’ve got a budget, you can get clever and find ways to save money. You can do things like comparing prices, hunting for discounts and deals, stocking up on stuff in bulk, or checking out alternative options that give you more bang for your buck. By being on the ball and taking action, you can make your budget stretch further. 

Swag Tip: When you shop in-store or online with funds from your Swag Spend account, you’re eligible for up to 20% Cashback at hundreds of retailers. That’s extra money back in your pocket each time you make a purchase. To ensure you always have funds on hand in your Swag Spend account, set up PaySplit to transfer a portion of your paycheck into your Swag Spend account each time you’re paid. 

10 tips for budgeting in a cost of living crisis

1. Be real with yourself

Take a close look at how much money is coming in and where it’s going. Look at your income, bills, and debts. This will give you a clear picture of your financial situation and help you make informed decisions.

2. Cover the basics first

Make sure you’re taking care of the essentials like rent, groceries, utilities, and healthcare. These are the things you can’t do without. Prioritise them so you know your needs are met. You can use Swag Stash accounts to set aside money for essentials. 

Swag Tip: In the Swag Store, you can find a range of discounted gift cards from retailers like Big W, JB HiFi, Uber, Myer and more —all at up to 5% off. That’s extra money back in your pocket when you do your weekly shop. 

3. Talk to your providers

Reach out to your utility companies, landlords, lenders, and other service providers. Explain your situation and see if there are any options available to reduce your payments, set up payment plans, or negotiate lower interest rates. Most companies will be understanding of financial hardship and make changes, but remember you always have the option to switch providers as well.

Coming soon: Bill Management

Simplify your finances with Swag Bill Management. You can streamline, manage, view and pay your everyday bills —and enjoy exclusive savings. Coming soon to the Swag app. 

4. Improve your knowledge of personal finance

By diving into personal finance resources, like books, articles, blogs, or even podcasts, you’ll discover a wealth of advice on budgeting, saving, investing, and more. But remember all advice is general and can’t take into account your personal situation. If you need extra help that’s tailored to you, don’t hesitate to reach out to a financial advisor—they’re pros at this stuff and can give you personalised guidance.

Swag Tip: If you’re looking for a place to start with general personal finance, we’ve got a collection of finance resources just for you.

5. Gamify your saving

Make saving exciting by making a game out of it. Give yourself rewards or “unlock” new levels when you reach your goals. For example, if you save a certain amount, treat yourself to a small splurge or a fun experience. You can even turn it into a competition with friends or family to see who can save the most. 

Swag Tip: The Swag store has a huge range of discounted electronics, gift cards, and Cashback offers that you can use to reward yourself for less. You can spend your hard earned Hero Dollars on discounted electronics, movie tickets, sportswear and other items in the Swag Store. With a Swag Spend account, you can even convert your Hero Dollars into real cash. So next time your employer rewards you with Hero Dollars for a job well done, you can redeem this for just about anything!

6. Explore side hustles

An alternative (or additional) solution to stretching your current income is to consider bringing in some more cash. Look for freelance opportunities, part-time jobs, or gigs that align with your skills and interests. It can help supplement your regular income and provide some financial breathing room.

Swag Tip: Take the stress out of the job search with Swag Jobs. 

7. Create a dedicated savings account

Gone are the days of stashing cash under the bed. Keeping your savings in a dedicated account offers a higher level of security compared to hiding cash at home, and it’s way easier to access it on the go. 

Swag Tip: Pay, send money and save instantly with $0 fees with a Swag Spend Account and Visa Debit card. You can set it up in just a few minutes in the ‘Money’ tab of the Swag App. 

8. Plan a “no spend” day or week

Challenge yourself to have a day or week where you don’t spend any money on non-essential items. Get creative with free activities, use what you already have, and focus on experiences instead of spending.

9. Automate your payments

Set up automatic transfers for as much as possible. This way, you won’t even have to think about it, and you’ll be consistently building up your savings without any brainwork. Plus, automating your bills means you’ll avoid late fees.

10. Pay less for your favourite brands

Save more every day. Save on your daily coffee, groceries, fuel and more with card-linked offers on hundreds of your favourite retailers. Get rewarded for doing the shop and watch your savings grow.

Swag Tip: Put money back into your pocket with up to 20% automatic cashback on purchases from leading brands like The Iconic, Booking.com and Adore Beauty.

Save money with Swag

With a world of benefits and earning potential, Swag can help you fight the current cost of living crisis. Get paid, spend and save. All in one app. Access your wages before payday, save more and unlock exclusive rewards to make your money go further.

Remember: budgeting can be your secret weapon. It helps you focus on what really matters, keeps your spending in check, and uncovers those clever ways to save. With a bit of determination and these budgeting tips in your pocket, you’ll be equipped to navigate these tough times and come out stronger on the other side.

 

Disclaimer

The information in this article is current as at July 2023, and has been prepared by Employment Hero Pty Ltd (ABN 11 160 047 709) and its related bodies corporate (Employment Hero) for its Swag brand. The information in this article is general information provided in good faith without taking into account your personal circumstances, and financial situation or needs, and should not be relied on as professional advice. Some Information is based on data supplied by third parties and whilst such data is believed to be accurate, it has not been independently verified and no warranties are given that it is complete, accurate, up to date or fit for the purpose for which it is required. Employment Hero does not accept responsibility for any inaccuracy in such data and is not liable for any loss or damages arising directly or indirectly as a result of reliance on, use of or inability to use any information provided in this article. You should undertake your own research and seek professional legal, financial and taxation advice before making any important decisions or solely relying on the information in this article.