4 Simple Lifestyle Hacks To Combat Rising Interest Rates

In July when rates were beginning to climb, I wrote an article (read here) 6 Simple Mortgage Hacks To Combat Rising Interest Rates, which focussed on maximising use of the tools at your disposal to reduce interest and pay off your loan more quickly (and is well worth another read!).

In the current market, the RBA is still raising interest rates to combat inflation, and are looking for spending behavioural shifts to determine when to stop. So, what are some behavioural changes that we can make to keep a few more dollars in the purse, and help more broadly to slow the runaway economy and prevent a tumble into recession?

1. Unsubscribe

Many businesses these days are moving away from a one-off payment for a product or service and implementing subscription fees for ongoing access to products or services. Do a quick review of your household expense account or credit card for all recurring transactions over the past month. How many of these are you actively using? How many are you seeing real value from?

Another hack is to make a list of all subscription services you are paying for and write down the date you began the subscription and how much it cost at the time. Huge profits are made on these services by incrementally increasing costs by a dollar or two at a time, without adding much more value (or in a lot of cases, lowering value by adding ads and reducing your number of logins).

2. Tap & Go

An easy way to let money slip through your fingers is by using Tap & Go cards and apps, because the expenditure isn’t readily visible. We’ve all woken up on a Sunday morning and been terrified to check our banking app to see the damage from the night before.

One of the oldest and most effective budgeting tools was simply withdrawing as much cash as you were prepared to spend that day/night/week and reining yourself in as the cash ran out (which was easy to check as you’d see the available cash every time you opened your wallet).

It’s possible to Tap & Go using a debit card connected to an account with a limited amount of funds in it. By budgeting what’s available to spend in your app before taking on the week (and logging in to check your balance daily) you can be a bit more deliberate about your spending.

3. Price match

Comparing apples to apples is another age-old method of curbing inflation by rewarding the businesses that are most competitively priced. However, this has become more difficult as many people have transitioned to buying their groceries online and may not be offered different options for the same product. These people will also not be comparing different prices from store to store, and will be less aware they’re paying well above a reasonable price.

If you’re a creature of habit, grab your receipts for a weekly grocery shop or trip to your local café and be on the lookout for how other businesses stack up. Speaking with your feet helps contain over-inflated prices and drives up your value for dollar.

4. Start a conversation

Probably the most important hack to slow down unnecessary spending is realising that spending is optional. Covid lockdowns showed us that we can meet our friends on a walking trail rather than a pub. We can have a cocktail party at home without cover charges, two-hour bookings, transport costs and overpriced drinks.

By talking about rising interest rates and their effect on household surplus cash, you’ll quickly notice that everyone is feeling the effects and a likely keen to find cheaper ways to keep socialising. The need to keep up with the Jones’ isn’t a problem when the Jones’ are in the same boat with you!

Even more important is having this conversation with your partner. In every couple there’s a saver - who doesn’t mind cutting back on certain things, and a spender – who can really struggle in this type of environment. Understanding each other’s thresholds and coming up with some shared goals helps to weather the storm together, rather than create stress in the home.