Three things you can do today to manage the rising cost of living

While you can't control interest rates or the cost of a lettuce, there are ways you can optimise your budget.

And it can start with simply shopping around for competitive rates for your existing bills.

"It's an unfortunate reality, but for many services, if you don't ask for a discount or a better deal, it can be a long time coming," says Kate McCallum, a financial adviser and co-author of The Joy of Money.

Here are three things you can do today to help you manage the rising cost of living.

If you'd like to skip ahead to particular section, use the links below:

1. 1.Home loans
2. 2.Power bills
3. 3.Groceries

Make sure you're not paying too much for your mortgage

If you have a home loan, there's a good chance your mortgage is your largest expense.

A small reduction in your interest rate can make a much bigger impact to your budget than cutting back on coffees or avocados.

The ACCC found that, as of September 2020, borrowers with home loans between three and five years old paid on average 58 basis points more than the average rate for new loans.

These borrowers could save up to $17,000 in interest costs by switching to a better loan, the ACCC found, assuming a loan size of $250,000.

In the first year alone, they'd save $1,400. 

Variable home loans are now available with rates as low as 2 per cent from major lenders, but keep in mind these rates are expected to rise significantly. 

When Sophie Roberts, 34, noticed she was paying more than other borrowers, she called her lender and asked for a better deal.

"With the last rate rise, I'm still below what I was paying. But with this [latest rise], because it was so much bigger, it'll take me to what I was paying [before] or maybe a little bit over."

It's important to do your homework, such as finding out rates available from other lenders, as well as understanding any fees you may be liable to pay for refinancing.

John Ng, a mortgage broker from Melbourne's west, says it's important to show your lender you're prepared to take your business elsewhere.

"When the lender receives a discharge notice, they will throw everything to keep the consumer," he says.

"They might waive the annual fee, they might throw in $2,000, they might drop the rates to the level the new lender was offering them.

"I always turn around and say, 'If they're offering this now, why didn't they offer this to you two years' ago?'"

Ms McCallum says it can also help to get an alternative offer before negotiating with your lender.

"You may wish to gain a pre-approval with another lender before contacting your current loan provider to negotiate your rate," she says.

"In this way, you're not in a theoretical position of potentially moving — you actually have a plan B that you can act on if your lender won't come to the party."

Check you're not paying too much for power

Power bills are another large expense for households, and while you can't control energy prices, you can ensure you're not overpaying.

Thankfully, it's relatively easy to compare offers for electricity and gas, thanks to government-run comparison sites.

If you live in New South Wales, Queensland, South Australia, Tasmania or the ACT, you can use the Federal Government's Energy Made Easy website, which covers every plan in the market.

If you live in Victoria, there is separate service run by the state government, Victorian Energy Compare.

The Victorian Government claims that households save $330 per year on average by switching providers. 

Also, if you live in Victoria, and you have a concession card, you may be eligible for a $250 power saving bonus for switching retailers. From July 1, the $250 bonus will be made available to all households providing they meet the eligibility criteria.

Western Australia and the NT are not part of the National Energy Market (NEM) so customers aren't able to switch to better offers. 

Plan ahead to save money on food

While your food budget is not going to stretch as far as it used to, there are ways to keep costs in check.

Here are some ideas:

• Plan ahead for meals and snacks — Professor Claire Collins from the University of Newcastle says this is one of the most effective ways to save on food. 
• Set a budget for discretionary foods — for example, sweets, takeaway meals and other treats.
• Check your pantry before heading to the shops — it will help avoid doubling up on purchases and save on waste.
• Shopping for food in season is cheaper — and better for you.

At the supermarket, you can save money by buying meat to freeze, opting for frozen vegetables over fresh and switching meat out for legumes or pulses.