How to trim the fat from your budget – and save

woman doing her budget

National Australia Bank, Commonwealth Bank and Westpac all recently suggested that interest rates could rise to 4.6 per cent in the next couple of months (implying mortgage repayments will climb again for many families before September). For many Australian households, that means big stress over increasingly bigger bills. If you need to find some fresh ways to reduce your expenses, understanding ways to trim the fat from your budget is a good start.

To tighten your spending, try these practical tips

Identify (and track) your spending habits

How can you cut what you’re spending if you’re not sure where you’re spending?

Even 30 days of watching where your money goes can be enough to shake up your spending habits. For the best results, try it for 60 days. It can be confronting, but discovering your monthly spend on takeaway muffins and ‘just one large fries to go’ can be as good for your health as for your bank balance.

Before devices, you’d gather up your paper receipts, write down your purchases and expenses in a notebook and stick the shameful revelation to your fridge door as a reminder of how to be better next month. Today, technology can take over. It makes working out why your spending is outweighing your saving as easy looking at your online banking statements. As for the guilty reminder? You can still stick that bank statement on your fridge if it helps. And those neon highlighter circles around all the offending purchases can serve as a warning.

Once you’ve identified the spending, mark it up as ‘needs’ or ‘wants’. Be honest. Insurance for your home is a need. But that new set of throw rugs and cushions you bought to introduce a new seasonal colour palette to your living room? Want.

If you still use cash for lots of purchases, we’re not sure where you’re shopping, but start getting receipts, in any case. The only way to change your spending habits is to truly know them.


Instead of thinking of it as a dirty word, look at it as a plan for where your money will go.

If making it too detailed sounds scary, begin with the basics. You’ll need to keep thinking about those needs and wants again as you make it. Add ‘goals’ as well, to give yourself some hope for a better financial future.

That way, you can start monitoring (and adjusting) your overall spending in each of those categories for more sustainable results that are focused on gains, rather than deficits.

Allocating money each month towards financial goals is important (the milestones you reach are motivating), but paying off debt should be a higher priority. Don’t be tempted to trim your spending by reducing debt repayments. That false economy could see you incur more penalty fees and interest debts.

The three basic steps of budgeting are:

  • determining your income
  • identifying all fixed monthly bills (rent or mortgage, utilities, insurance, other loan repayments)
  • being honest (and comprehensive) about your needs (food, petrol, medical expenses)
  • discretionary spending is what’s left. And now that you know the amount, figure out how much you can use to pay off debts faster, while still putting a little bit into emergency fund savings, as well as a small amount to edge towards a goal.

There are apps that can help, if you like to utilise tech. A quick search online will reveal many free resources.

Next? It’s time to trim that fat.

How many subscriptions to streaming services do you really need?

Answer: None. How many do you want? Surely one a month is more than enough. Let yourself exhaust the supply of binge-watching, one streaming service at a time, rather than engaging with multiple subscriptions you don’t have time to make the most of. And magazines and newspapers (if you’re still that way inclined)? That’s what libraries (or friends with subscriptions) are for.

By asking yourself these three questions, you can make some money-saving choices:

  • How often do I use this?
  • Do I need this?
  • Can I live without this?

To help avoid temptation, make sure you unsubscribe from the associated emails that are connected to your various subscriptions. That way you won’t keep seeing those plaintive ‘where did you go?” marketing strategies, designed to woo your dollars back into someone else’s bank account. Fight the urge. Keep your money in yours.

Reduce power use

This isn’t about advising you to sit in the dark, huddled around a candle flame for warmth. Candles are expensive, after all. But with electricity (and gas) usage accounting for around 4 per cent of average household spending (and that will increase now the price hikes are hitting hard), making sure you turn lights off when you’re not in the room, turning devices off, instead of leaving them on standby around the clock, and making sure you only run the dishwasher with a full load, you can make a difference. And it will add up.

Focus on sustainability

Buying items second-hand (clothing, household items, etc) is not only better for the planet, it’s better for your budget.

Plus, turning the tap off while you brush your teeth, installing energy-efficient light globes and reducing your shower time by a couple of minutes will all help trim your bills.

Shop around for better deals

Driving three suburbs away to save a dollar a kilo on carrots isn’t sensible, But there are other ways to shop around and save – on everything from insurance products, to petrol prices (check out fuel-finding apps that point you to local cheap fuel), to energy providers. Comparison websites make it even easier.

Shop with a list – and not when you’re hungry

Cutting down on impulse spending at the checkout sounds like small potatoes but it can make a huge difference to your weekly bills. By meal planning and only shopping after you’ve eaten, you’ll avoid those little purchases that are definitely in the ‘want’ category.

Even if it doesn’t feel like much, try it for a month or two, then track your spending to measure the difference. Anything that has been saved is exactly that – a saving – and if you’re using it pay down debts or reach a goal, think of how much better you’ll feel when you hit your target.

Read more: How safe is your data with a budgeting app?

What’s an expense you could trim from your budget today for immediate savings? What expenses do you find too hard to cut? What’s your short-term savings goal? Share your experiences about budgeting and reducing your costs in the comments section below.

Written by Claire Halliday

Claire is an accomplished journalist who has written for leading magazines and newspapers, such as The Sunday Age and Sydney Morning Herald, Australian Women's Weekly, Marie Claire, Rolling Stone, Australian House & Garden, GQ, The Australian, Herald Sun, The Weekly Review, and The Independent on Sunday (UK).

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