With workers pinched by record-low wage growth, experts have identified ways to “squeeze every dollar” from their pay.
The wage price index, Australia’s official measure of pay rises, published on Wednesday, confirmed that wages grew in 2016-17 by just 1.9 per cent.
This was the lowest for any financial year since the series began in 1997.
Bessie Hassan, Money Expert at comparison website Finder.com.au, said now was the time for Australians to find ways to “squeeze every dollar” from their pay.
“Sluggish wage growth and record-low interest rates means we need to be frugal with our money by finding ways to squeeze every dollar from our pay packets,” she told The New Daily.
Workers will know more about the state of the labour market on Thursday, when the latest figures on average weekly earnings figures and the unemployment rate will be released.
For now, here’s how to cope.
Reduce your bank fees
Ms Hassan advised Australians to research the fees they pay on financial products and look for cheaper alternatives.
“It may involve some groundwork and research of what prices are available on the market, but the savings will be well worth the effort.”
For example, some bank accounts have no account fees, and some credit cards have zero annual fees.
Ms Hassan also suggested cutting back on double-ups.
“If you have several credit card or loan accounts, think about rolling your balance onto one account with a lower interest rate and fewer fees.”
Don’t overpay the taxman
With this year’s tax deadline not until October 31, many Australians may not have lodged their returns yet.
Ms Hassan said another way to squeeze value from a pay packet was to maximise any tax refund for 2016-17.
“Knowing what deductions you can make when the taxman comes knocking is a smart way to get the most from your wage,” she said.
“Whether it’s claiming work-related travel expenses, uniform, or claiming expenses related to running a home office, do your research to find out what you’re entitled to claim.”
Ask for a mortgage discount
Steve Mickenbecker, finance commentator at comparison website Canstar, encouraged Australians to phone their bank and request a better mortgage rate.
According to the 2016 census, the average Australian spent roughly a third of their income on mortgage repayments.
“Switching from the current average variable home loan rate of 4.50 per cent to a rate of 4.35 per cent, on a $300,000 loan could save you close to $9500 in interest over the life of the 30-year loan,” Mr Mickenbecker said.
Finder’s Ms Hassan also recommended a ‘refinance’, which is where you apply for a new mortgage to replace the original.
“Switching to a new provider that offers a cheaper interest rate could save you thousands of dollars over the life of the mortgage,” she said.
“Just make sure you estimate the switching costs involved, like any early payout fees charged by your existing lender and any establishment fees charged by the new lender, to make sure refinancing makes financial sense for you.”
Ditch unnecessary health insurance
Mr Mickenbecker also suggested cutting unnecessary health insurance extras, such as dental and physiotherapy.
A recent Canstar survey found that 71 per cent of respondents with extras cover did not use it.
“The benefits of extras cover only exist if you are actively making claims each year,” he said.
Canstar calculated that a NSW couple with top hospital and top extras cover could save around $1900 a year by dropping the extras.
Consolidate your superannuation
ASIC MoneySmart, the government’s financial literacy agency, promotes consolidation of super funds as a money saving tip.
Because superannuation is effectively deferred wages, and because every fund charges fees, consolidation can be a smart way to be frugal with your earnings.
David Atkin, CEO of industry fund Cbus, said “every little bit helps”.
“Our members know that every little bit helps so we regularly remind them to make sure their superannuation is being paid and beyond consolidating multiple accounts, we also encourage our members to make additional contributions when it is appropriate for their personal circumstances to do so.”
According to the ATO, more than 6.3 million Australians (about 43 per cent) have more than one super account, with 25 per cent holding two accounts and 10 per cent with three.
To find out how many funds you have, consider creating a MyGov account and linking it to the ATO.
An easy way to consolidate is to contact the fund you want to stay with and ask them to transfer your other savings across. They’ll do the hard work.