How to Reduce Living Costs and Save Money
Manage Money and Household Bills More Effectively
Jun 25, 2009
Finding ways to save money on living costs is essential, particularly for those who are on fixed incomes with little scope for over-time. Manage money more effectively, cope better with household bills and reduce personal debt by following these simple techniques.
Stop Spending Frivolously and Reduce Living Costs
The primary defence a consumer has against rising living costs is to spend less money. It is a lot harder to earn money than to avoid spending it. Use a few of the following measures:
- Keep itemised receipts for any purchases made. Analyse outgoings and identify areas where it is possible to reduce living expenses.
- Focus on paying essential household bills (needs) and avoid frivolous, luxury purchases (wants) in order to save money.
- Avoid buying new electrical goods and repair them instead. A new item may be nice, but it still constitutes a luxury.
- Walk instead of driving everywhere in order to save money on gas/petrol.
- Drink and smoke less. Try to spend less on social spending and identify free or inexpensive ways to occupy any spare time.
Reduce Living Costs by Refinancing
Minimise living costs by trawling the market for the best financial deals. It is possible to save money by doing one or a combination of the following:
- Perform an interest-free credit card balance transfer. Perform a transfer at the end of each promotional period in order to save money and clear personal debt.
- Switch from a tracker to a fixed-rate mortgage deal before interest rates go up. Rates may be higher in the short-term, but savings will be realised over the life of the loan.
- Pay off high APR store cards and overdrafts with an inexpensive personal loan.
Clear Personal Debt
Living costs are high due to an escalating debt-to-income ratio. Better money management is possible by paying off personal debt with savings. This will not only help to save money, but free-up funds to help with essential household bills.
- According to a Consumer Action credit card survey in July 2008, the median APR on new purchases was 13.54%. With interest rates on savings so low, it is sensible to clear debt. For example, if a consumer had both $10,000 of savings and $10,000 credit card debt, clearing debt would save upwards of a $1,000 per annum.
Whilst falling inflation is supposed to have lowered living costs, this is not the reality for most people. Manage money more effectively by being frugal and reducing personal debt. This will help to free-up money for essential household bills.
Sources
Geffner, Marcie. (Feb 3, 2009). "Cash crunch? 6 ways to get liquid." The Boston Globe.
Consumer Action credit card survey - July 2008
Disclaimer: This article in no way attempts to give legal or tax advice. One should consult a licensed attorney, tax advisor, or other qualified professional.
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