What you need to do to save a whopping $12,000 a year

A financial expert has revealed exactly how you could be saving an unbelievable $12,000 each year.

While inflation and interest rates are now easing, most people are still doing it tough.

Natural disasters continue to impact food prices, and petrol costs fluctuate based on overseas wars. Here’s some good news: you’ve probably got ways to save money hiding in plain sight. Most Aussie households are bleeding money in one or more of the following ways:

1. Loyalty taxes

Banks, insurers, telcos and utilities offer better deals to new customers while jacking up prices for existing ones. It’s called the ‘loyalty tax’. And it can add thousands to your bills. For instance, automatically renewing your car’s CTP could cost you up to double!

Review your spending at least annually. Shop around for a better deal then ask your current provider to beat (or at least match) it. If they don’t, switch.

Potential savings: $20+/month per bill; $100+/month on a mortgage.

2. Not rightsizing insurance

Surprisingly, many people pay for cover they no longer need. A good example is women with maternity cover even after going through “the change”. Review policies before each renewal. Update your cover as your circumstances change.

Potential savings: Upwards of $5/month.

3. Having multiple loans

Multiple loans means multiple interest rates. Average rates are around:

• 6 per cent on a mortgage

• 10 per cent on a car or person loan

• over 20 per cent on credit cards

Consolidate expensive debts into one loan with a lower rate.

Potential savings: Around $1500/year, depending on debt size, type and your credit history.

Multiple loans, such at mortgages, mean multiple interest rates. Picture: NCA NewsWire/Gaye Gerard

4. Paying loans monthly

Monthly repayments equal 12 per year. But fortnightly repayments equal 26 each year (not 24) since most months have 4.5 weeks. More repayments pay the loan off faster and reduce overall interest.

Potential savings: $6124/year (assuming a $500,000, 30-year mortgage with a 6.23 per cent rate).

5. Paying with cards

How much is the convenience of the fantastic plastic costing you? Transaction fees average 0.25 per cent to 2 per cent across credit and debit cards. That quickly adds up each time you pay bills or buy groceries. Instead, use cash wherever possible.

Potential savings: Up to 2 per cent on all spending.

How much is the convenience of the fantastic plastic costing you? Picture: iStock

6. Forgoing cashback apps

Cashback apps pay a portion of your online shopping back into your PayPal or bank account. If you aren’t registered and logged in when shopping online, you won’t receive these payments. Register with a reputable cashback app (e.g. Cashrewards, ShopBack). Some banks have their own (e.g. Commbank’s Yello, NAB’s Goodies).

Potential savings: Average $6-7 on every $100 spent.

7. Unused subscriptions

Subscriptions are perhaps the easiest way to bleed money. The amount just disappears from your account automatically, without you doing anything at all. They quickly add up, as the following averages show:

• Gym membership: $70/month = $840/year

• Streaming services: $8-$26/month = $96-$312/year

• Magazines – $85/year

• Professional memberships – $95 – $1,200/year

That’s over $2400 each year! How many are you still actively using? Review your bank statement monthly. If you no longer use something, cancel it ASAP.

Potential savings: $7-$70 each/month.

Take a look at your subscriptions. Picture: iStock

8. Unclaimed tax deductions

H&R Block suggests Australians on average miss out on $237.44 in unclaimed deductions each year. Commonly overlooked deductions include:

• Expenses (working from home, travel, self-education)

• Industry-specific and workplace safety costs

• Ongoing financial advice

• Depreciation

• Super contribution benefits

Keep good records to avoid missing claims. Your accountant and financial adviser will help maximise your deductions.

Potential savings: $237/year.

9. Incurring late fees

What do energy bills, council rates, tax, mortgages, credit cards, Buy Now, Pay Later (BNPL) schemes, libraries, tolls, and traffic fines all have in common? You’ll pay more if you pay them late. Late fees can be up $50 each time. The ATO applies penalty units of up to $330. Others accrue interest on the amount owed. Automate bills and save due dates into your calendar to pay on time.

Potential savings: 70 cents – $400 each.

10. Unclaimed gift cards

News of the unclaimed $100 million Powerball win enthralled the nation. Yet unclaimed money is more common than you think. Aussies lose a staggering $1.4 billion on unused gift cards alone. That’s $51 for every single one of us. Regularly check your purse, wallet, utility draw and car glovebox. When you find one, use it … or lose it!

Potential savings: $51.

Unclaimed money is more common than you think. Picture: NewsWire/Nikki Short

11. Not investing

The longer you wait to invest, the more you miss compound earnings plus any tax benefits (like deductions for superannuation contributions). Your financial adviser can help you create your investment strategy to maximise returns and minimise tax.

Just $20/month invested for 30 years, averaging 7 per cent returns, nets you an extra $24,399.42. Invest $500/month and you’ll be $609,985.50 richer!

Helen Baker is a licensed Australian financial adviser and author of the new book, Money For Life: How to build financial security from firm foundations (Major Street Publishing $32.99). Helen is among the 1 per cent of financial planners who hold a master’s degree in the field. Proceeds from book sales are donated to charities supporting disadvantaged women and children. Find out more at www.onyourowntwofeet.com.au.

Disclaimer: The information in this article is of a general nature only and does not constitute personal financial or product advice.