How to cut household expenditure by $3000-$8000 a year

Wednesday, 1 April 2020

Without daily commutes, many households now have more time to look around for better deals.

Moneyhub says most households could trim $3000-$8000 from their annual expenditure.

The online money research company has released a list of the 20 areas in which households most commonly fritter money.

Most households can find thousands of dollars in savings, if they look hard enough, according to MoneyHub founder Christopher Walsh.

It hopes households under financial pressure as a result of the fight against coronavirus will be able to use it to help keep their heads above water.

'New Zealand's economy changed forever in 2020, sinking household incomes,' said Moneyhub founder Christopher Walsh.

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'This guide is published to help Kiwis make the most of their income and eliminate unnecessary spending,' he said.

'We believe that anyone who actions three to seven suggestions from the list could easily save $3000 to $8000 per year.'

The guide, which can be found on Moneyhub's website, includes cancelling subscription services, investigating whether to switch power provider, and reviewing insurance arrangements.

Retirement Commissioner said many households have more time on their hands during the lockdown, and should use some of it to review their finances.

'People always mean to review their financial plans. Now is the time to do it,' she said.

'We have the time on our hands, and we are at home with our documents.'

Deleting easy-pay, and lending apps may be a good idea.

It's a time people could research their alternatives, and decide which institutions they wanted to continue supporting, and which ones to leave, she said.

Insurance was one area where households could make large savings, according to Walsh.

He cautioned about under-insuring, but said shopping around could save $1500 a year on life, house and car insurance alone.

Some people with low value possessions might even consider cancelling their contents insurance altogether.

Taking advantage of a credit card 'balance transfer' offer from a different bank to the one people had their current card with could save interest, with balance transfer offers ranging from zero per cent interest for 12 months to 5.95 per cent until the debt was paid off.

With balance transfers people had to be careful to read the terms and conditions carefully, or risk quickly reverting back to paying high interest again.

Someone with $5000 of credit card debt could save around $1000 by switching from their current credit card provider to one offering a zero per cent balance transfer deal, Moneyhub said.

Overdrafts, mortgages and personal loans were also areas where savings were possible, Moneyhub said.

People should also consider deleting easy-pay, easy-debt apps from their phones..

'Paying for a hair appointment at $50 a week for six weeks, or $75 a week for four weeks for an impulse shopping trip, feels a bit 'yesterday',' Walsh said.

'These apps rely on continuous consumer spending and add another complication to keeping your money under control. If you really want it, saving up for it and paying for it in cash is fast becoming the new normal.'

Phone plans, broadband and power are other areas people should go in search of better deals in a bid to cut costs, Moneyhub advised.

It had also never been more important for households to keep tabs on government support that may be available.

Some of the tips from Moneyhub require the country to come out of lockdown to achieve, such as selling under-used assets like the second family car, and ending the casual purchase of lunch from cafes instead of taking packed lunches to work.