If you're one of the many Kiwis struggling to make ends meet amid rising food, petrol, rent costs and mortgage rates, a new report provides some useful ideas to cut costs down.
The annual cost of living in New Zealand reached nearly 5 percent in the September quarter, the highest in over a decade. Over the same period, 42 percent of workers got no pay rise, while 40 percent had a boost up to 5 percent.
A January report by independent economist Tony Alexander, titled 'How to handle a high cost of living', shares suggestions from Kiwis who have lived through periods of higher price inflation in the past.
Collating ideas from 450 respondents, the most popular suggestion in the report is to "stop buying cafe coffees", making it at home or buying a second-hand coffee machine instead.
Another popular suggestion is to eat and entertain at home, cutting out restaurant meals and takeaways, including food delivery services.
Quick ideas for saving money
Among the obvious suggestions for saving money provided in the report are to "check if there are any ongoing subscriptions that you could live without", to "make a cut lunch at home for work", and to "buy used items, not new", looking on websites such as Trade Me and/or Marketplace.
These platforms could also be used to sell unwanted items for extra cash.
Other ideas are to "shop around for phone, electricity and internet providers", to "put up excesses on insurance", "get rid of the landline" and to "wash in cold water" to reduce power costs.
For those with children, one person suggests spending money on "an occasional experience with the whole family", rather than short-use items such as plastic toys. Another suggests rewarding children with time rather than treats.
Ideas for saving on food costs
As food is a significant and regular expense, ideas shared in the report are to take a "pre-written grocery list to the supermarket", to shop online rather than in store (as it's easier to take snacks out of an online shopping cart), to use leftovers, and buy cheaper home brands.
One person suggests buying rice and potatoes in bulk, together with things like sausage meat, eggs, cabbage and onions for evening meals. Porridge is suggested as a breakfast staple, and bread and vegemite for lunch.
Another suggests people "go to night school and learn to cook", to help cut out ready-made food and delivery services.
Ideas for topping up income
Ideas shared in the report for topping up income include taking on a second job after work (such as ironing), swapping jobs with friends and neighbours, (e.g. cleaning, gardening, babysitting) and for homeowners to "rent your home out during holidays".
Others suggest taking advantage of the buoyant job market by staying informed about opportunities to grow income, and to "benchmark your current remuneration with similar roles".
Ideas for planning to save
As saving money requires planning, many in the report said using a spreadsheet to record monthly income and expenses (i.e. a budget), helps them to save.
Examples of categories used to monitor expenses are food, car, house (mortgage, rent, electricity, rates, insurance), entertainment (including hobbies and subscriptions) and medical. Travel, gifts and clothing categories could also be included.
After going through their bank statements line-by-line, one person said they realised they were spending "a little amount a lot" and were able to make small cutbacks.
"Small changes, like a prepped lunch and 50 percent less takeaway coffees meant we saved a lot quickly," the person said.
Another person suggests listing expenses from highest to lowest and brainstorming with family members to see whether the expense could be removed or reduced.
And for those who do have spare money sitting in a bank savings account earning less than the rate of inflation, there's a suggestion to see if it could be put into assets that have the opportunity to provide a higher return.
Summing up the report, Tony Alexander told Newshub the ideas are useful for people not only grappling with price rises, but also for homebuyers struggling to get a mortgage.
To comply with changes introduced under the CCCFA, banks demand three months of proof that spending can be reduced, he said.
He suggests prospective borrowers get their bank statements for the past three months and "look at where money is going". It's easy to spend money on things like coffee and eating away from home, but they "add up every day".
"It's nice to do, but it's insidious… on one day it might not feel like much, but over a week, [it's] $150," Alexander added.
