Hello and welcome to It all adds up. The podcast where we chat about money, how to get it, how to spend it, and how to invest it. I'm money editor at the Sydney Morning Herald and The Age newspaper's Dom Powell.
And I'm Jess Irvine, a senior economics writer at the same paper's Look Dom, it's been a massive week in personal finance, with interest rates still on the rise. Meanwhile, we just know the cost of living is biting across everything really from food to rent to toilet paper. Actually, I'm not sure about toilet paper. I did that actually get more expensive during COVID? It definitely got more expensive.
We just had less of it. So, I mean, it was expensive. If you're buying from the guy on Facebook marketplace who was hoarding rolls, who.
Was charging $100, I never.
Got to that point, which I'm honestly sad about because I think that would have been that would have been fun to have to do that. But yes, you know, things are expensive. Things have been expensive for a while now. We know this regular listeners of the pod will know that that the cost of living has been has been pretty grim. And so we're continuing our series, our six part series, looking at real life budgets with real life people and real life problems and how people are tackling
the rising cost of living. And this week's question comes from our listener, Tony, who wants to know how he and his family can save on some of their bigger bills and cut some costs out of their household budget. So let's have a listen, Jess.
Hi, Jess and Dom. It's Tony from Melbourne. I work full time and live with my wife and two kids aged 12 and eight. We find insurance is one of our biggest costs. We spent about 3500 a year on car insurance for our two cars. I drive to work in the city and my wife drives to park more, both from Berwick. Our petrol and tolls add up to about $1,300 a month. We spent about $2,000 on food, which includes groceries and everything to do with Coles and Woolworths,
including eating out. I would appreciate any tips you have on how we could save. Thank you.
Radio So Tony's highlighted sort of two pretty major costs for his family here, which is insurance and food. So I suppose let's start with insurance. Jess, what are you what do you reckon?
Yeah, I was really gobsmacked by Tony's car insurance because I think I pay about $500 for comprehensive insurance on that's cheapest chips.
I'm at like chips. I'm at like a grand for mine.
Well, this is fantastic because I can share with you how I managed to do this. I did check in with Tony and he is driving sort of some higher value cars. So I think that has an impact because you have to insure them for a higher amount. The premiums are higher. And I did try to sort of jump on some websites. I was like, I'm going to
save Tony some cash. And I was jumping on lots of different insurance websites and I remembered how horrible it is to have to go through shopping around your insurance. And then I gave up. So, Tony, I'm sorry, I haven't actually got you an improvement on your current premiums. But just to empathise with everybody shopping, your insurance is not like the super sexiest thing you're ever going to do.
It's not the most exciting. But unfortunately, we have to let people know that it is actually a massive way
to save money. So shopping around and not just letting your car insurance in particular auto renew, because one of the things we know with insurance is that if you just auto renew every year, the insurers have differentiated pricing so that you actually pay what we call a loyalty tax, that if you don't present yourself and say, I want a better deal, they will slowly ratchet up your premiums
compared to what they offer to new customers. So I'm not actually sure if Tony has done this, but he should. At least there's a thing you can do called mystery shopping where you just go on your insurer's website and go, Yes, I'd like a quote. Here is some information it asks you for your address. So I'm not sure if it has a way of knowing, Hey, wait a minute, you're
already a customer. But see what the quote that it generates for you and that's something everyone can do is just sort of shadow shop.
I think shopping around is definitely something that everyone should do, though. I think in my own personal experience, shopping around has only ever made my insurance more expensive. Oh, and I have no idea why this is. Maybe it was just because I got in at a good time and I'm sitting on like quite, quite a good deal. But every single time I try and look for for other other car insurance, it's at least a few hundred dollars more. No matter where I go, even if I go to
my same insurer at the moment. So I think it can be a bit of a mixed bag sometimes. So sometimes you just got in at a sweet spot that maybe that is the best price you're going to get.
Well, it can depend and it depends on like where you housing garage, the car, how many kilometers you drive. And so each insurer has their own little intricate system. So maybe you're getting stung by, you know, just some
sort of finer detail. And look, just to join the chorus of don't actually shop around if you're using some of the comparison websites like compare the market finder not to sort of penalise any of them in particular, I have found with some of those sites, you want to get a quote, you're like, Sure, show me the prices. And they're like, Sure, give me your email and your mobile phone number and I will call you for the next five weeks trying to get you to take up
a new policy. So you do sort of expose yourself to quite a lot of cold calling with some of those websites, not necessarily the ones I've just named. But having said that, in theory, if you are just auto renewing every year, you are going to get stung. So it is a good time to shop around just to get that competitive force working for you and becoming a new customer, which we know is just the basic level of the basic rule of finance, is to to shop around.
But I suppose like outside of like shopping around, there are other ways that you can save, right? Like you can't you don't just have to jump ship from insurance company to insurance company every year.
Yeah. So one of the best ways to sort of see whether you're actually getting value for money on the insurance that you have is actually to review the coverage that you have. So we're moving into territory now, which is not just I'm going to get something cheap, the same thing cheaper, which is shopping around, but actually looking at scaling back some of the insurance that you have.
So a lot of people are underinsured. I think a lot of people are also over insured in that they're sort of paying for these top level comprehensive bells and whistles policy. Seas insured for all the things and with the lowest possible excess, because I think that's the right thing to do. And, you know, that can be a
good decision for you. But if you are, for instance, and I don't think Tony's actually in this particular situation, but like with interest rates going up, if you're looking at all your insurance premiums and just going, this doesn't add up, there are ways to reduce your premiums, which do involve a trade off for slightly less coverage than you're getting. But the first one is just review your excesses.
So if you accept a higher excess, which is the amount that you agree to pay in the event that you're in a prang and you have to actually, you know, make a claim, you're like going to pay $500 out of pocket or it's $1,000 out of pocket. If you agree to a higher excess, that's going to reduce your
ongoing premiums. And so, you know, that could turn out really bad for you if you just drove into something the next day and then you're going to pay $1,000, not 500 out of pocket, to get the work done to your car or, you know, you could be saving, I don't know, like a couple of hundred dollars every year, you know, do that for a couple of years. And then you've you've saved as much as you would have to pay extra out of pocket. And so you're ahead
on the deal. So one of the reasons why my car insurance is so cheap at like 500 is I've actually got a pretty low level of insurance and I think I've agreed to an excess, which is something like $2,000 or something. That's because I know that I've got a significant bank of savings. Hey, I'm not rolling in it. But sorry, I've, I've got an.
Address is completely just as loaded.
I'm loaded. I've got an emergency fund which is fully funded to sort of 3 to 6 months of living expenses. So I know that if I do have to incur that excess, it's not going to ruin me. And they sort of say insure for against things that are going to ruin you.
And I suppose like it's almost like a little game, right? Like if you've got a really high excess, it's like, you know, the longer I can go without having a car accident, the better value for money. I'm getting here. Yeah.
And it was like it was hundreds of dollars off my annual premium to do that. So I'm a bit of a gambler, as it turns out. I've got a pretty high risk tolerance and I'm in a position to be able to to play with that sort of thing. So I mean, otherwise to save. So look at your sum insured. So there's two different car insurance policies on
comprehensive anyway. You can do either a market value, so you write off your car and the insurer says, great, we will pay you out the sum that is equivalent to the market value of your car at the time of your crash. Or you can agree to an agreed value policy. So so you can there's a minimum that they'll let you do. But like with my car, it's probably worth about 20 grand second hand. I think I've got it set so that I've agreed that I'll get a payout of like ten grand or 12 grand total
if I totally. So that won't buy me my same car on the open market, but it'll buy me a car, you know, like I'll, you know, it's not going to replace my car, but I'm just accepting that if I do have this terrible accident, that's going to be a lot of going on in my life. And one of the things is that I'm going to have to drive a not as nice car. And of all the potential things that are probably going on at that time, that
might be the least of my worries. Although for some people you really want to know that you're covered to get the same car again. But however, I saved like hundreds of dollars a year on my premium just by agreeing to that lower amount. So but essentially you're getting less, but you're paying less as well.
The I guess, radical option if you are looking on ways to save on your car insurance, which is this is especially relevant, I think, for people who have two cars, especially if you have two nice cars, which a lot of people do. Um, obviously car insurance is more expensive
on nicer cars and higher value cars. So what you could do if you've got a car that you don't drive as much or you use it for like shopping trips or, you know, taking the kids to, to soccer or something like that, you could sell it on the used car market, which is booming at the moment and has been booming for a few years. And by something that's. Less good, you'll save an insurance, you pocket a bit
of extra cash. And if all you really need is just a functional car, you can pick up something that's that's not quite as expensive. So that's I mean, that's obviously that's a big decision, but it's definitely something you could do and it will save you money in sort of a number of different ways.
Yeah, that's lateral thinking because it just it unlocks some equity. You know, you've got an asset that is not liquid and you can sell it and buy something cheaper and you've freed up some cash if you're in that situation, that you really need it. One last thing to consider on car insurance is the type of insurance that you get. So many people think you can only get comprehensive if you want to be good and be properly covered. But lots of people choose to take out a lower level policy.
So we know that through our ktp slips, everyone is covered. You're forced to get that through your RJO in some states or you pay for it separately. In other states. That's going to cover you for medical bills. If you hit another person or you get injured, you personally, you know the people are damaged. If there's property damage in a car crash, your comprehensive cover will cover your car as well. If you know if for any damage, you can get lower levels of policy, which are called third
party property damage, which doesn't cover your car. So you have to cover the cost of your car and fixing it. But it does cover you if you hit the porch or you hit the very expensive car and suddenly they're saying, hey, that's going to cost 100 grand to fix or whatever. So again, it's substituting for a lower level of insurance. But again, if it's really if you're in a tight situation, that's something to consider, that there are different levels of
car insurance as well. And there's another one called Third Party Fire and Theft, which covers you if you hit the other person and if your car is in a fire or is stolen. So but doesn't cover you for damage to your car if you're in an accident. So insurance, hey, the wonderful world of insurance. I think it's not something anybody wants to have to think about, but we're the cost of living as it is. These are the big bills.
These can add up to hundreds, if not thousands of dollars and is something that is worth spending a little bit of time investigating. What coverage you have and what coverage you need.
Yeah. And I think just to sort of round off the car chat, I think Pony also mentioned that, you know, petrol is another expense, petrol sort of one of those sort of unavoidable expenses, right? Like, you know, it's always going to be expensive. We're never going to be happy about the amount of money we spend on petrol. Like
it's never good. Obviously, you know, the, the common sort of thing is to shop around, get one of those apps that let you look at all the prices nearby you and make sure you're always getting the cheapest price unless you want to buy an electric car always an option you know could be there available these days if you want to save money on petrol, obviously that is an extreme choice. But you know, if you could do it, that would be a way to save money on petrol.
Well, that's true. What's the best app in Victoria? I'm in New South Wales and Fuel check is the one you want to download. Yeah, the one Victoria.
One I use is Petrol Spy. So the other thing that Tony mentions in his, in his message is that he spends around $2,000 a month ah for food for him and his family and I think that's, that seems like quite a significant amount of money. And he mentioned that this also covers, you know, all his grocery shopping and then eating out takeaway, all that sort of stuff. So yeah, food's again, one of those things is a bit like petrol, like you're always going to spend money
on it. You're never going to be super happy about the amount of money you spend on it. But I think there are a few things you can do just to sort of cut those costs a little bit.
Yeah, I've been tracking my food spending for a couple of years now and I think I average I was averaging about $450 per month to feed myself and my eight year old for he's with me half of the week. I think that has crept up though. More recently. I'm heading sort of 550. I had a $600 month, so I can definitely feel those rising prices at the grocery store. That is not a beat up. Those prices are really,
really noticeable. So the eating out as well can get a little bit out of control, particularly if you're a busy family. I added up. I spent about $650 last month on like Uber Eats, eating out and restaurants. It was a bit of a YOLO kind of month. I'm I'm still YOLO going away until I'm still on my fixed low rate mortgage and I feel like it's coming. It's coming, but I haven't quite adjusted the spending yet,
which is probably means it's my fault. Interest rates are still going up because the Reserve Bank is like, stop spending. And I'm like, Yeah, but not on eating out anyway.
Stop spending. But not you, Jess. Not yet.
So but this month we. I have got the sun on board. We're going to do a little experiment and it's no eating out March. And I introduced this concept to my son, and I said, I'll give you 20 bucks if you just agree to this and get on board and don't whinge about it because kids whinge a lot and they're like, I want to have Macca's, I want to have pizza. And I've also promised him that I will start preparing like the meals that he loves. We order sushi on Uber, eats for an easy meal
at night when I couldn't be bothered. So I've been making. We made sushi rolls on the weekend and they had it.
How did that go? I think they're famously really easy to make.
They were really bad, I think. My rice was like glue. It was like stuck together. And I think maybe I didn't rinse it well enough before I boiled it or something.
Starchy. And you got to. Yeah.
And you really want to wait until they're totally cold to serve because it was just a little bit warm and also crunchy and also glug. And we were not we were not sold on that one, but it was significantly cheaper. I also did prepare a mac, a fake McDonald's Happy Meal for my son. So I like I bought the mince, I mixed it with an egg. I made it into little patties. I had some brioche buns and I had the cheese slices and tomatoes. So I
made the hamburger. We had the frozen chips and I also bought like sugar free coke from from the shops. And I spent the whole morning cooking this for lunch. And I added it up that it costs about like it cost me like $5 to make the meal. And a Happy Meal is only about $6 anyway. I think.
So if you're going to try and fight for like, you know, cost plus price against Macca's, you're never going to win.
No, I think they have like a significant economies of scale situation going on. So, you know, the advice is always to cut your food bills, cook everything at home.
It's not always the case, although I think on average, you know, if you're not paying for the restaurants rent, labor costs, you know, tax overheads, whatever, you know, you're just buying the raw ingredients and cooking it at home, you know, And if you don't have anything better that you could be doing with your life than spending the whole morning cooking your fake McDonald's meals, it's either it's an option that's not a great example, but I do
think it still holds that buying the fresh ingredients and preparing them at home is where you want to be aiming.
One of my favorite things to do, and for context, I would say that I probably spend around $400 ish a month on food as just a single single guy living alone. That includes, you know, eating out. And, you know, Uber eats and all that.
Sort of stuff. That's pretty good if it does include all those things as well.
Yeah, I'm a big fan of sort of like the freezer meals and you get you buy like go to the Asian grocer and you get the big pack of like, you know, pork dumplings or something. You throw them in the freezer on the way home, you grab some Asian greens and you put it all on the on the steamer. And it's super simple, super easy. Like it's, you know, if you break it down, it's very cost effective as well. So like that's a way that you can sort of, I guess, you know, some low cost meals that aren't
sort of super difficult. And I also think that like one of the things that I've sort of come around to recently, which I think is a real sort of, you know, me sort of finally saying goodbye to my youth is, you know, getting really on board with supermarket loyalty schemes. Yeah. You all started you all this is it. This is it. This is the beginning of the end. But like.
You'll be reading things like, I now read things and I sort of hold them out a little bit further from my face that.
I've started saying like, oh, as I got up from the couch. So like, you know, that's it. Yes. Audible groans. Oh, no. But the one of the things that you sort of begin to realize that if you do all your shopping at just one supermarket, right, like just a Coles, just a Woolies and we show we had any others that were worth mentioning, obviously Aldi, but they don't have a loyalty scheme that you. We'll get like a sort of really outsized rewards in terms of the amount of points
you get back Those points convert into dollars. You know, you can save a bunch of money. So in Tony's message to us, he mentions that, you know, Coles and Woolworths, which implies that his family shops across both. So if you've got a $2,000 a month spend on on food, you know, I would say at least 1500 of that or maybe a thousand of that is going to be groceries. If you shop just at one of those supermarkets and redeem your loyalty every single time, you're going to start
seeing some savings there. So that would be something else. I would say just sort of really sort of focus your spending and then maybe supplemented with something like an Aldi shop, right? Like get all your basics at Aldi and then get everything else you don't like. All the specialty sort of items from from a Coles and Woolworths. I think that's a great way to sort of, you know, just trim a bit of fat around the edges and get get some reward for it when it comes to your weekly shop. Yeah.
And a specific program I think is worth mentioning, although it's not an endorsement of Woolworths, but Woolworths does have an everyday extras program which you pay $59 per year to subscribe to it, but it entitles you to 10% off one shop every month. So you know, if you do so I have now started, I will do that as my first shop of the month, we tick over to 1st March, whatever it is, and I'll jump on.
I also shop now online because I find that that avoids the temptation of just throwing everything that I see into the basket and I can be really strategic and the websites will let you order your search for something and then search for it by unit price listed the cheapest listed at the top. So it'll show you the home brands first and you can still scroll down and get your more expensive brands, but it's just a little prompt to go, Well, maybe I can just go for
the cheaper home brand. So I'm finding shopping online very effective and then I try to buy as much as I can in that one big shop at the start of the month, get the 10% off. I sort of did a $300 shop, get the $30 off, which is nothing to sniff at, which was stuff I was going to buy anyway. And you can do that every month. So in about two months I already made back the cost of the program. So and then for the rest of the ten months, you're into discount territory. So pretty good everyday extras.
Absolutely. And those, you know, especially if they're freshly launched, they will do anything to get new customers in. So sometimes you can make big old, big savings.
And looking out for just the 50% things that are off. You can also on the websites, Coles and Woolies, you know, shop the specials.
Absolutely. So hopefully there's some practical tips in there for our listeners and for Tony as well. You know, if you're thinking about your insurance, make sure you review your excesses and look at what your insurance is covering you for. You know, there's a ways to sort of cut down some costs there. Yes.
And I still think it is worth shopping around the insurance policies, as boring as that may be. Just set aside half an hour on a weekend to hit up some websites and see what else is out there for your car and home insurance. The same sort of rules apply for home insurance of reviewing your coverage and your excesses and shopping around. Yeah, and food. You know, I feel like that's a it's hard. We have to eat, Tom.
Everybody has got to eat. So, you know, it is hard to have to see those prices going up all the time. I think the message from the Reserve Bank is very strongly stop eating out, stay at home, eat your baked beans, don't have your Shiraz and your Wagyu, which.
Was I mean, I was never having Shiraz and Wagyu in the first place.
Either. You got to have mints and tap water only these days and hopefully Aldi wine.
Yeah.
So that's an Aldi wine is actually really good. Yeah, I will say that it's actually worth a try. So yeah, I think it's the spirit of the times and we can all sort of tighten the belts a little bit and hopefully that will be enough to sort of, you know, the whole point is that we were going to the shops too much and paying too much and not sort of complaining about the prices. And so the shops are able to put the prices up. There needs to be
some sort of push back. And we are supposed to be being more cautious and being more discerning in what we pay for things. So if you're feeling that pressure, you're definitely not alone. There's definitely pressure there.
Absolutely. But yes, hopefully some of these things help you and, you know, join us next week for the final episode in our six part series of everyday budgets. Still send them in. We're still we're still keen to to, you know, hear from you guys always it it all adds up at Nine.com.au. But as always, thanks for listening.
See you next week.
This episode of It All Adds Up was produced by Chai Wang. The information discussed is general in nature and does not take into account your personal financial situation, goals or objectives. You should always do your own research or get professional advice before making any major financial decisions. If you like today's episode, hit follow on your podcast app, Leave a review and recommend it to all your friends. You can also submit your listener questions in text or
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