Ben Garrard, his partner Ola and their seven-year-old daughter Sophie are hoping to upsize from their Melbourne home within the next 12 months. Picture: Supplied.
Ben Garrard and his partner Ola are reaping the rewards after revamping their approach to saving money just two years ago.
The couple, who live in Melbourne’s south east with their seven-year-old daughter Sophie, are hoping to upsize to a new home in the next 12 months.
Mr Garrard said about 24 months back, he and Ola had adopted a system where they assigned savings to different categories such as future bills, insurance and holiday funds every pay cycle.
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They even began putting money into stocks as a long-term investment.
“We started a couple of years ago, probably after we got annoyed because we didn’t know where everything was going and we made a better system,” he said.
Mr Garrard said that he educated himself about finance using books and podcasts before he and Ola reshaped how they budgeted and saved money.
“I think it’s pretty easy and obviously, you have to do it as a family,” he said.
But he noted it was important to be disciplined and to not constantly dip into the savings.
The Commonwealth Bank, Westpac, NAB and ANZ are all anticipating the Australian cash rate will be lifted to 3.85 per cent when the Reserve Bank meets next week.
Mr Garrard added that it was important to put money aside for the future before earmarking it for other everyday costs and to try to avoid consumer debt such as car loans.
“Try and avoid consumer debt – for example you get a car loan and you’re likely going to end up paying $90,000 for a $30,000 car,” he said.
“I don’t think that’s worth it.
“But if you’re borrowing to leverage into an investment I think that’s smart depending on your age and as long as you can service it.”
Canstar analysis shows a typical $600,000 mortgage repayment would increase $90 a month if rates are hiked by 0.25 percentage points, while a $1m mortgage would rise by $150 a month. Picture: NewsWire/Gaye Gerard.
A new report from research company Digital Finance Analytics (DFA) shows borrowing Victorian households carry an average debt of more than $306,000.
The typical $306,548 Victorian debt includes an average $147,907 mortgage cost, $128,142 in investment property-related debt and $23,416 in other consumer loans.
DFA director Martin North said the research company conducted surveys of Australian households on topics such as average outstanding debts related to mortgages, credit cards, loans and other information.
The cost of Australia’s average new home build hit $492,410 in the 2024-2025 financial year, Housing Industry Association analysis shows. Picture: NewsWire/David Crosling.
From these figures, DFA estimates financial stress right down to individual postcodes.
Victorian postcodes with the largest average debts included Pakenham, Melbourne, Mordialloc and Brighton, with $1.4m-plus debt per borrowing household.
The data took into account all homeowners including those who have owned their properties for a long time and have little remaining debt.
DFA director Martin North said small interest rate increases would not significantly impact the majority of Australian households, if they had jobs.
But he added that recent first-time buyers who had leveraged up to buy on the city’s urban fringe and in high-rise were “in the front of the pain queue”.
DFA director Martin North said even small rate rises could be “disastrous” for young families and first-time buyers on Melbourne’s fringes and in high-rise buildings.
Buxton Bentleigh director Simon Pintado said while some buyers would not be affected by interest rate rises, such as those who have paid off their mortgage, others would see their borrowing capacity hit hard.
“Generally, in my experience, in the last 17-odd years, there hasn’t been a crazy amount of rate movement,” he said.
“But when the rates do go up, people are just a little bit more hesitant, a little bit more gun shy, so to speak – they don’t want to necessarily overpay or pull the trigger on the next purchase in the fear of uncertainty from the RBA.”
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