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A seniors guide to budgeting – what you need to know

Right now, many older Australians on a pension are having a tough time making ends meet, as the cost of living crisis hits vulnerable people hardest.

(Source: Shutterstock)

(Source: Shutterstock)

Key points:

  • Your needs change over time and you need to adjust your budget to suit them
  • Using the perks of your Seniors Card or other concession cards can let you cut back on essential costs
  • Know the eligibility requirements of your state or territory, as you may be entitled to more than you are receiving

Right now, many older Australians on a pension are having a tough time making ends meet, as the cost of living crisis hits vulnerable people hardest.

The cost of living crisis is made up of many different factors in the economy that impact day-to-day life, such as inflation, the job and housing market bubbles and wages not keeping up with the cost of goods and services.

Given the fact that pensions are fixed incomes, rather than variable, seniors may feel that they do not have the earning power of younger Australians who can keep up with economic trends.

For roughly 1.5 million older Australians, the pension serves as their main source of income, but on average, a pensioner only receives payment worth a third of their rent.

With that in mind, let’s discuss how to find stability in unstable financial situations, when we have to count our coins and figure out a best way forward.

This article will cover what is important in your budget, how you can cut costs and some of the resources that are available to you in order to maximise your potential savings.

Understanding what’s important

By looking at your savings, income, superannuation and pension, you should have a pretty good idea of where your money is coming from, but going through your last few monthly bank statements, you will also get a clearer picture of where your money is going.

The simplest principle to help you budget your money is the 50–30–20 rule. Sounds complex at first, but it’s really quite easy to learn and apply to your next incoming payment. 

It simply means dividing the money you earn into different buckets to allow you to pay for the essentials while also having money to spend and save.

50% for necessities and financial obligations, 30% for debt repayment and saving and 20% for things you want, along with entertainment expenses.

Once you’ve taken the time to figure out how much money you are spending and receiving, iit may be worth looking at any options to cut back on spending for example any unnecessary purchases which you made along with subscriptions that you may have, to discern what isn’t important in your life.

Take a pen or highlighter and make a note of things that you consider essential or at the very least, serviceable, in order to understand what you can cut out of your life without risking a diminished quality of wellbeing.

Essentials include:

  • Utilities (water, electricity, internet and phone plans, gas and council rates)
  • Food and grocery shopping
  • Medication
  • Rent or home maintenance
  • Public transport and/or petrol, car servicing and registration
  • Family or care expenses (school fees, day care, child support)
  • Outstanding debt payments
  • Cost of pet ownership (food, veterinary expenses)

Seniors on a pension may find budgeting apps, such as ASIC’s TrackMySPEND, to be useful in keeping track of their money, along with the Moneysmart Government guide.

How you can cut costs

Knowing how to cut costs comes down to knowing what your options are. Obviously, non-essential costs such as holidays, entertainment and habits such as smoking or drinking are things that you can try to cut down on, but for other parts of your life, you can readjust your spending to suit your lifestyle.

For seniors and pensioners, private health insurance is a strategic way to ensure greater access to specialists and prevent costly procedures or treatments. But it may be worthwhile reviewing your policy annually to see if coverage and the cost of your plan are within your budget and suit your respective needs. To find out more about private health cover, please read the comprehensive private health insurance guide, for what you need to know on the topic.

Often, particularly with subscription model services that require monthly or annual payment without your direct use or attention, you may be offered a discount in order to stay, so even if something does contribute to your quality of life, it might be worth seeing the kind of offers that they may extend to you in order to stay.

Another thing to consider in your life is the assets you own, which can include cars that you no longer use, old collectables, jewellery or even your home.

Many older Australians seek to downsize in their golden years, as the conveniences and necessities of a spacious environment in a family home are no longer needed, with kids moving out and even loved ones passing on. Moving into a smaller property or renting instead of owning can restore a sense of balance to your life and allow you to capitalise on a long term investment, instead of worrying about what happens next.

Cutting costs doesn’t always have to be as drastic as selling your house or getting rid of your private health insurance, as there are many resources available to you in order to help seniors maintain their financial independence and prosper in their community.

How you can maximise potential savings

Seniors are able to access a wide array of concessions, ranging from healthcare through to utility and transport, which can ease the burden of many associated essential costs in your budget. If you are wondering what benefits and entitlements you may be eligible for, please visit our information article on the topic.

Different cards let you get discounts on a wide range of everyday expenses, but knowing which cards there are and the requirements to get each card can be a bit complicated.

Here’s a quick summary of each card name and criteria:

  • Australian Seniors Card — issued by residential state or territory of senior’s residence and eligibility varies by state or territory, but is generally awarded to a those over the age of 60, working less than 25 – 35 hours per week
  • Pensioner Concession Card — eligible at any age if receiving an Age Pension, Bereavement Allowance, Carer Payment or Disability Support Pension
  • Commonwealth Seniors Health Card — are ineligible for Age Pension or Department of Human Services payment, but of Age Pension age threshold and satisfy an income test

Public transport differs from state to state, but pensioners with a Seniors Card are entitled to:

  • Free public transport across buses, trains and trams in South Australia via the MetroCARD, with interstate seniors eligible for a seniors’ MetroTicket for 14 consecutive days of free (non-peak hour) travel
  • 50 per cent discount on the purchase of a seniors myki card and all fares in Victoria
  • 50 per cent discount on public transport fares in New South Wales through Seniors Card holders with an Opal Card
  • Seniors are eligible for half fare discounts on their Translink go card with proof of their Seniors Card ownership
  • Free off-peak travel through the Western Australian TransPerth SmartRider card for WA residents, along with interstate and WA Seniors Card holders entitled to over 50 per cent off their peak hour fares
  • Seniors Card holders in Tasmania and interstate Card holders are entitled to a $1.92 flat fare per journey with the Metro Greencard in Hobart or $2.40 if paid in cash
  • Australian Capital Territory public transport technology is built into territory issued Seniors Cards, but interstate Seniors Cards will entitle you to enjoy free non-peak and half-price peak hour travel, which is capped at $4.80 on weekdays and $2.17 on weekends
  • Free daily bus travel all week in the Northern Territory upon presenting their Seniors Card

The best part about the discounts on public transport across states and territories in Australia is that if you were looking to sell that car to keep yourself afloat or save on petrol — even if you were already reliant on public transport — each state offers you a way to travel at a discount.

Health care concessions available to seniors on a pension include subsidies on prescription medication under the Pharmaceutical Benefits Scheme (PBS), along with bulk-billing for trips to the doctor and tax deductible dental and optical services, along with other medical expenses. If you are interested in the support options available to you, please read more about accessibility during times of financial hardship.

Utilities such as water, electricity, gas and council rates, which are essential cost of living expenses, are generally offered at a discounted rate for Australians on a Seniors Card, although the extent of those discounts varies for each state and territory.

The National Seniors Concessions Calculator will show you what is available to you based on your card holder status, state or territory and relevant information, such as your home owner-occupier status.

Many Seniors Card holders across Australia enjoy commercial discounts and perks on entertainment and groceries as well, for specific days of the week or during period events, so make sure you find out which outlets and shops offer low cost solutions to everyday living and plan ahead.

For more information about finding financial aid and fiscal freedom, please visit the Aged Care Guide finance portal to learn more.


Related content:

Aged care and financial planning

Understanding aged care costs

Myths about retirement financial planning


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