There are around three million people living in poverty in Australia. Living below the poverty line, which means that you earn half the amount of the average household, can be stressful and worrisome.
“If you have financial stress, there is a correlation to relationship and work stress. If you are worried about your finances it permeates other aspects of your life,” says Claire Mackay, financial planner and director at Quantum Financial.
“If you don't have confidence to pay the bills then you are constantly worrying and you develop that 'head in the sand' mentality.”
Learn to budget
Mackay works mainly with Sydney's wealthy but she says family budgeting is the same no matter how much money you make.
“The foundations of being wealthy, however you define it, is that you don't have to worry about paying for your next grocery or electricity bill. And the foundation of that is budgeting.”
To make a budget, Mackay recommends the Australian Securities and Investments Commission's Moneysmart website. Moneysmart suggests pulling out your bank and credit card statements to have a look at your credits and debits.
This will highlight the areas of spending that could be cut back. Things like monthly subscriptions, daily coffees from cafes or spontaneous trips to the shops could be putting unnecessary strain on your income.
Creating and mastering a household budget takes a bit of skill, time and patience. Moneysmart has a handy budget wizard that will help you set your budget and keep you on track. They also have a free app that allows you to track your spending.
Once you know exactly where your money priorities are, it's easier to know how to make your dollars stretch further. And at first, it may be hard to sacrifice certain habits, so don't be too hard on yourself if you slip up once or twice.
“Be kind to yourself. If you splurge one week, don't throw it all away. Maintaining a budget is the most powerful things you can do to create financial security,” advises Mackay.
Be a planner
“It sounds really boring and restrictive but it is super important that your spending is less than your earnings. And you need to plan that,” says Mackay.
Planning meals in advance and then shopping for those ingredients (with a shopping list) saves you buying things you don't need or food that won't get eaten.
But it's not just the food bill that takes planning. Bi-monthly, quarterly and annual bills such power, gas, car registration and insurances need to be calculated and accounted for so you don't get a shock when those bills arrive.
Making short term saving goals is a good way to inspire and motivate you to press on, says Mackay.
“If you say you want your savings account to increase by x amount in a month's time, it's easy to see your accomplishment. You'll get to a point where you are seeing overall improvements and that's a really satisfying feeling.”
Ways to take the pressure off
If you're drowning in debt, managing it and weekly living expenses on a low income is all the more stressful. But there are ways to find relief.
Drawing up a budget and forecasting your spending can help you better manage the funds you have available.
The National Debt Hotline (1800 007 007) offers free financial counselling. They will give you sound advice on how to get your finances back on track.
Household utility providers are legally required to assist you if you can't meet payment due dates. Get in touch with them as soon as possible to discuss how much you can afford to pay.
Other tips on how to make ends meet
- Make a budget and if you can, stick to it.
- If you have capacity, save for future expenses (car rego, insurances).
- Have separate bank accounts for daily expenses and short-term goals.
- Plan meals in advance to prevent impulse spending on food.
- Food shop with a list.
- Avoid convenience shops and express supermarkets, which often sell essential goods at higher prices.
- If you have the means and the right environment, grow your own vegetables.
- Buy clothing and household items at op-shops.
- Use public libraries for education and entertainment.
- Sell the things you don’t use or need.
If you or someone you know needs support, please contact Lifeline on 13 11 14.
All six episodes of Struggle Street series two are available to view on SBS On Demand.
Struggle Street series two is produced by KEO Films with funding support from Screen Australia and Film Victoria.