Costs crisis: how Australians are slashing spending to survive

Young Australians are feeling the cost-of-living crisis twice as badly as their Baby Boomer parents. Here’s how to find savings.

Rising cost pressures have forced almost four out of five Australians to cut spending in key household areas, with young adults finding the financial strain twice as tough as their parents.

Finder’s new Cost of Living Australia report says surging prices have piled financial stress onto 70 per cent of Generation Z (aged 18 to 28) and 61 per cent of Generation Y (aged 29 to 43), while only 29 per cent of Baby Boomers are stressed.

It says 89 per cent of Gen Y and 90 per cent of Gen Z have cut back at least one household expense, compared with only 59 per cent of Baby Boomers and 72 per cent of Generation X. The biggest areas for spending cuts are groceries, holidays, entertainment, food delivery and petrol, the report says.

Finder’s Graham Cooke says there are steps people can take to cut costs. Picture: Supplied

Finder head of consumer research Graham Cooke says larger savings are a key reason behind older Australians’ stronger position in the cost-of-living crisis.

“The more money a person has in savings, the bigger security blanket they have and the less likely they are to feel stressed out,” he says.

Cooke says the biggest impact on households has come from rising interest rates that have added an average $12,000 to annual mortgage repayments.

“The increase over the last 10 months has been very impactful, even for renters who don’t have a mortgage because there has been a flow-on,” he says.

Cooke there are simple steps consumers can take to relieve cost-of-living pressures, including targeting high-interest debt first, creating a budget and switching to cost-effective financial products.

“Make sure you have a shopping list, don’t go beyond what you plan to buy and look for reward programs,” he says.

Cooke says online shopping can deliver good discounts, while those physically shopping should seek specials at the end of the day and end of the week.

Money coach Karen Eley says she is seeing people cut back on discretionary spending in areas including dining out, takeaway food and entertainment.

“We’re all feeling the pressure, but those new to the workforce in the rental market or with young families are doing extremely tough as they’ve not experienced these conditions before in their lives,” she says.

Money coach Karen Eley says eating at home helps cut costs. Picture: Heidi Wolff

Baby Boomers have been through hard financial times before and might still practice frugal habits, Eley says.

She says household costs can be reduced by:

• Examining current spending by checking bank transaction histories.

• Eating at home and storing extra meals or leftovers in the freezer to prevent nights where you take shortcuts and order takeaway food.

• Becoming energy savvy and efficient with your appliances.

• Reviewing mobile and internet plans. “There are some really competitive deals out there,” Eley says.

Originally published as Costs crisis: how Australians are slashing spending to survive