Trying to juggle the ever-rising cost of living while paying mortgage or rent is enough to make your eyes water; with lettuce going for $10 and the expense of filling your car and paying bills set to skyrocket, things are getting more than stressful. If your savings are taking a hit, here’s five tips to help you with the rising cost of living.
1. Talk To Your Employer About Salary Sacrificing
Salary sacrificing isn't just about topping up your super for your twilight years; there are a number of ATO-approved options for the method, including childcare, car and loan repayments, mortgages, and even holidays, which get paid before you get your wages.
Say, for example, you make $1200 before tax. You have a salary sacrificing agreement that each week $200 goes towards paying off your car and $300 towards your share of your mortgage. This comes out of your wages before it is taxed and, therefore, you only pay tax on $700. It’s important to talk to a certified financial advisor before setting up a salary sacrificing agreement, as it must be structured correctly to limit your liability for fringe benefits tax.
2. Rent Out A Room
Heading back to the office more often and thinking you don't need to have that dedicated WFH space? Live-in landlords are becoming more common, and with the squeeze on the rental market, it could be an easy way to reduce your outgoings. You may be eligible for tax deductions, such as claiming a portion of the internet, water rates, council rates, body corporate fees, cleaning and maintenance costs, and interest on your mortgage, if applicable. If you're a renter and planning to sublet a room, check with your landlord to avoid breaching your rental contract.
3. Declutter And Sell
If you have pre-loved clothes and shoes, books, jewellery, electronic devices you no longer use or furniture taking up room, list them on Facebook Marketplace or Gumtree for sale (make sure you're clear in communicating your expectations of what they're worth). There are plenty of people looking for affordable household goods and electronics, and a few sales could generate a nice little cash buffer.
4. Check If You Are Eligible For Financial Assistance
There are a number of financial support programs, concessions, rebates and business grants available from state and federal governments for those who meet eligibility requirements. Long-term projects, such as Saver Plus, educate those on low income on how to save money. Program participants set a savings goal, and when reached the amount is matched up to $500 which you can spend on educational items such as computers, textbooks and TAFE/VET fees.
If you’re hit with the need to buy home goods or appliances, fix your car, or pay for a medical procedure or service, you may be eligible for the No Interest Loans Scheme (NILS). There are also a variety of small business grants to help those who need marketing assistance or a boost to technology for up to $15,000. You can learn more here.
5. Start A Side Hustle
It costs nothing to get an ABN and then set yourself up as a sole trader. Whether you’re flipping domain names, helping friends and family with graphic design, or selling arts and crafts, you may be eligible to claim back tax for depreciation of furnishings and goods used to complete your work, rent, insurance, electricity, and internet for the work-related portion. Not to mention, you could generate a good side income. If you need assistance on correctly structuring your business to avoid being slugged with a tax bill at the EOFY, make sure you talk to a certified tax specialist.
Keen to learn more about better managing your finances? Check out our guide to setting (and hitting) financial goals here.
Gerry Incollingo is the Managing Director of LCI Partners, a firm that specialises in accounting advisory, lending, wealth, property, insurance and legal based in Parramatta.
Disclaimer: The information contained in this article is general in nature and does not take into account your personal objectives, financial situation or needs. Therefore, you should consider whether the information is appropriate to your circumstances before acting on it, and where appropriate, seek professional advice from a finance professional such as an adviser.