Maximise your household budget in a cost of living crisis

The rising cost of living is placing real pressure on households across Australia. Everyday essentials, from groceries to power bills, are eating up a bigger chunk of paychecks, leaving less room to breathe financially.

In fact, financial concerns are now the top worry for Australians, with over half (52%) listing the cost of living, economic stability, and financial security as their greatest concern, according to the Real Concerns Report 2025. It’s a growing pressure felt across generations, especially among Millennials, parents with children at home, and women.

However, there are ways to take back control. In this guide, we offer practical budgeting tips to help you make smarter financial decisions, find extra savings in your day-to-day expenses, and access cost of living support in Australia that you may not even realise you're eligible for.

1. Review and track your spending habits

Before you can start cutting costs, it helps to understand exactly where your money is going. Getting a clear picture of your current living expenses can help you make more confident, informed decisions.

Create a budget based on current expenses

Start by reviewing your bank statements and bills over the last two to three months. List your income and all your expenses, like rent or mortgage, groceries, fuel, utilities, childcare, and any other recurring expenses. 

There are plenty of free budgeting tools or apps that can help, or you can use a simple spreadsheet to track it manually. The goal isn't to judge your spending, it's to bring visibility to it.

Categorise needs vs wants

Break your expenses down into essentials (needs) and non-essentials (wants). For example, rent and electricity are needs, while subscribing to multiple streaming services or regularly ordering food delivery dinners are wants.

Conduct a monthly budget health check

Budgeting isn't a one-time activity. Revisit your spending each month to see what's changed and where you can adjust. This might mean tweaking your grocery budget during school holidays or cancelling a subscription you no longer use.

You can also try the 50/30/20 rule as a guide: 50% of your income goes to needs, 30% to wants, and 20% to your savings goal or debt repayments.

The Real Concerns Report 2025 found that 91% of Australians see the rising cost of living as a reasonable concern, and it’s not just about bigger bills, but about a growing sense of financial instability. Tracking your money isn’t just a budgeting exercise, but a powerful way to feel more in control during uncertain times.

2. Prioritise essential expenses and cut the rest

When you're planning a budget, one of the most effective things you can do is focus on what truly matters and let go of what doesn't. That means making sure your essential costs are covered first, then trimming away any non-essential spending that no longer fits your current priorities.

Identify must-pay costs and allocate funds

Start by listing your fixed, non-negotiable expenses: rent or mortgage repayments, utility bills, insurance, transport, groceries and any medical or childcare needs. These would be your "must-pays".

Once you've covered these, allocate what's left toward savings, debt repayments, and discretionary spending, in that order.

Cut back or cancel unused bills and services

It's easy to let subscriptions and memberships pile up over time. Go through your direct debits and ask yourself things like:

• Do I really use all of these streaming platforms?
• When was the last time I went to the gym?
• Am I still using that meal delivery service or premium app?

Even small cuts can add up to hundreds over the year. Consider downgrading to a cheaper plan or cancelling anything that's no longer adding value. 

3. Reduce household costs without compromising too much

Cutting costs doesn't have to mean sacrificing comfort, it just means being smarter with how you spend. Here are a few simple ways to lower your living expenses without drastically changing your lifestyle.

Lower your utility bills

Water and energy bills are some of the biggest regular outgoings for households, but they're also an area where small tweaks can lead to big savings. Switch off appliances at the wall when not in use, run full loads in the washing machine and dishwasher, use fans or natural ventilation instead of air conditioning, and compare electricity and gas providers using a comparison tool to get the best deal.

Be smart with groceries

Grocery shopping is another area where small habits can make a big difference:

• Plan your meals for the week and create a shopping list, and stick to it
• Buy in bulk for non-perishables like rice, pasta and toilet paper
• Swap name brands for store brands on staples like milk and flour
• Avoid shopping when hungry, since this allows impulse buys to creep in

Even shaving $30–50 off your weekly shop adds up to around $2,000 a year, all without giving up the foods you enjoy. These changes might not feel dramatic day-to-day, but they're a powerful example of how to budget and save in ways that still work for your routine and household.

4. Make the most of government and community support

If you're feeling the pressure of rising bills or reduced income, you're not alone. 76% of Australians worry about having enough money to cover emergencies, and 78% are concerned about saving for retirement, especially women, Millennials, and families with children at home.

The good news? Help is available. Across the country, a range of rebates, concessions and one-off payments are designed to ease the rising cost of living for individuals and families.

Check what you're eligible for

Each state and territory offers different forms of cost of living support in Australia. These may include:

• Energy bill rebates 
• Transport concessions
• Rent or mortgage assistance
• Childcare subsidies 
• Vouchers for essential goods or school supplies

Support is available for a wide range of people, not just concession card holders. You can also explore community organisations, local councils and not-for-profits for things like free food pantries, financial counselling, or emergency relief programs.

5. Boost your income where possible

When reducing expenses can only go so far, increasing your income can help bring your budget back into balance. In today's digital world, there are more flexible ways to earn extra money than ever before.

With nearly 4 in 5 (79%) of Australians concerned that wages aren’t keeping up with the cost of living, finding extra income can make a meaningful difference.

Explore the gig economy or freelance

Got a skill or spare time on evenings or weekends? Consider:

• Driving for rideshare or delivery apps
• Offering freelance services in writing, design, admin or tutoring
• Pet sitting or dog walking
• Casual retail or hospitality work

Even a few hours a week can help cover a rising bill or top up your savings account buffer.

Sell unused items

Look around your home. Are there clothes, furniture, tech items or toys you no longer use? Selling through online marketplaces or local buy, swap, and sell groups can turn clutter into quick cash.

Review tax and super

Check if you're claiming all the deductions you're entitled to, especially if you're working from home or earning a side income. It's also worth reviewing your super to make sure your contributions and fees align with your long-term goals.

6. Set financial goals to stay motivated

Managing money during a cost of living crisis can feel like a constant juggling act. But having clear goals can help keep you focused and remind you why your efforts matter.

Think short-term and long-term money goals

Set a mix of achievable short-term goals (such as saving $100 on groceries this month) and longer-term ones (like building a three-month emergency fund or paying off a credit card). This sense of progress can be incredibly motivating.

Track your wins

Seeing your progress makes it easier to stick to new habits. Whether you're paying off debt, lowering a utility bill, or resisting impulse spending, write it down or use a budgeting app to keep track of it all.

Remember, budgeting regularly to save money doesn't mean cutting out joy. It's about making intentional choices so you can feel more in control, less stressed, and better prepared for what's next.

Keep Reading: Discover everyday ways to maximise your finances and minimise stress.

It's no secret that the rising cost of living has made everyday life more challenging for many Australians. But by taking small, manageable steps, you can create more breathing room and feel more in control of your finances.

Though focusing on day-to-day savings is important, it's just as important to think about the future. Life insurance can help protect your family's financial well-being, no matter what lies ahead. With the right cover in place, you can have peace of mind knowing your loved ones will be supported if the unexpected happens.

When it comes to planning for life's uncertainties, a little preparation today can make a world of difference tomorrow. With Real Life Insurance, you'll see how easy it is to protect what matters most. Get your free quote today.