Will it add up?

The cost of living in Australia is a hot topic for migrating families. The Australian dollar is strong and the cost of living seems high to most new arrivals. Last month we shared our Australian Family Relocation Budget and discussed the savings you’ll need to move to Australia (assuming you’re not relocating all expenses paid through work).

Today we look at the monthly expenses your family will need to cover in Australia and share our experience of how things compare between London and Sydney.

Before we start we should mention that Mum is not going to give you exact figures for everything we spend per month; the cost of items varies across Australia and prices will change over time.

In order to keep this article relevant and accurate we’ll talk about what we spend money on and whether it differs to how we spent our family income in London. We’ll provide plenty of links to resources that give you an idea of the exact figures.

Disposable income – same, same but different

We have the same disposable income in Sydney as we did in London. We spend our money slightly differently but what we have at the end of the month for savings or treats is the same (i.e. not a lot!!).

In Australia we spend more on groceries than we did in the UK. We also have expenses that we avoided in London like running a car and paying for private health insurance. However, this is balanced out by the fact that we spend less on socialising and entertaining the children. The beach and local playgrounds are free and that’s where we hang out most of the time.

Our children’s extra-curricular activities cost less per session here than they did in the UK. For a better quality child care facility we are paying less than we did in London. We are paying school fees in Sydney, which you might not pay in the UK, however we would have sought out Private education in London so the school fees are less here that we were likely to pay there.

Rent or Mortgage

Financial gurus will tell you that the percentage of your monthly income that you spend on housing costs should not be greater than 33%. Housing costs refer to rent or mortgage payments, utility bills and insurances.

In a survey by the Australian Bureau of Statistics looking at records from 2007 – 2008, “For the majority of owner and renter households [throughout Australia], housing costs represented less than 25% of gross household income, but for some it was more than 50%. In 2007-08, 8% of private renters and owners with a mortgage spent more than half of their gross income on housing”.

We wouldn’t mind betting that the 8% paying more than 50% of their household income on housing live in Sydney!

We’re currently renting and pay around 33% of our income on housing costs but we have made compromises in order to achieve this. We would prefer a more modern and larger house but are happy with what we’ve got, given the location. We’ve chosen location over the type and quality of property, we couldn’t have it all living where we do in Sydney.

When we planned our move to Australia we hoped to buy a property within a few years of being here, we have revised and at least doubled this time frame!

Unless you have a big deposit the difference between paying rent and mortgage on a similar size property in Sydney is big. If we owned the property that we’re currently renting, even with a fairly decent deposit, our monthly outgoings would increase. We’re not totally put off buying here but can understand why families in Sydney rent rather than own their beachside properties. We know many families who live the beach lifestyle in rented accommodation and own property elsewhere in Australia.

Utility Bills in Australia

Part of the recommended 33% of your monthly household income that should be spent on housing costs includes utility bills and home related insurances. The bills you may need to cover are;

  • Gas
  • Electricity
  • Water rates
  • Broadband
  • Home contents insurance
  • Council rates (if you own your property)

We’re in a rental property and our landlord covers council rates.

When we arrived we used an online comparison tool, like Youcompare.com.au to select an energy provider. InternetChoice.com.au is a useful site for comparing broadband providers in Australia.

All the big Australian insurance providers (NRMA, Youi, Allianz) provide home contents insurance. You might get a good deal for home insurance with the provider of your car insurance or vice versa.

Grocery shopping

If you’ve read UK products you’ll miss in Aus or Help! I’ve lost my shopping savvy you’ll know that it took Mum time to get to grips with grocery shopping in Australia. I felt overwhelmed by the new brands and constantly had the sense that I was being ripped off because I didn’t know what price I should be paying.

I’m now much more clued up about Australian grocery shopping, as you’ll read in Mum’s ultimate Australian supermarket price comparison and Photo Friday #10: Gotta love Aldi.

After rent, grocery shopping is the next most significant cost that we cover per month and we still feel we spend more here than we did in the UK, even though I’ve got to know brands and supermarkets much better. This might also be because our family is growing up. We find the provision of interesting and healthy packed lunches, five days a week, to be pretty costly!

Health insurance

The type of health insurance you need in Australia will depend on your visa type. We’re permanent residents so needed to decide whether to get basic ambulance cover only and rely on Medicare for everything else, or get the full package with extras like dental and optical care.

We used iSelect.com.au to compare funds and select a health insurance provider.

We’re written several articles explaining all you need to know about Medicare costs and private health insurance, they can be found here: Healthcare in Australia the series.

Mobile telephone

We don’t use our landline and couldn’t live without our cell phones. When we first arrived we got basic handsets and used Optus pay as you go. We then treated ourselves to iPhones and pay monthly with Vodafone. This is about five times more expensive than a cheap pay as you go phone but we’ve taken the view that Mum and Dad need a few luxuries, and because we use our phones for email and social media they help us feel more connected to family and friends around the world.

There are a number of websites available that let you compare mobile telephone packages, iSelect.com.au is one of them.

Car expenses

In London we didn’t need a car; shops were within walking distance and we use public transport for everything else. In Sydney we couldn’t live without a car and we understand that this is the same throughout Australia.

In Buying a Car in Australia we include details of the expenses you need to consider when running a car in Australia.

Mr Mum’s gone 2 Aus uses a motorbike to commute to Sydney’s CBD; it takes him about 25 minutes (the bus would take 45 minutes). He’s done the maths and assures me that as well as the time saving, running a motorbike is cheaper than getting public transport. The same cost and time comparison doesn’t work for a car, unless you’re very lucky and your employer provides parking, the cost of parking alone will make public transport a better option than driving by car into the CBD.

Public transport

Although we have a car and use it most of the time, we often use the bus to get into the city centre in Sydney. We generally buy a 10 trip bus ticket for $24. If you plan to rely on public transport in Sydney, or elsewhere, you should research the cost before deciding where to live. We’ve written about Public Transport in Sydney – for commuters and kids, and included cost examples.

Education costs

Public schooling is free in Australia for citizens and permanent residents. In School tuition fees for temporary Australian residents we explain the costs that need to be covered by temporary residents to Australia (some visa types are exempt).

Although public schooling is free there are always voluntary contributions and fundraising activities that parents are expected to participate in. You should allow several hundred dollars a term for this.

Most Australian schools require students to wear a uniform; we talk more about the things you need to buy for the start of the school term and their cost in Starting school in Australia, what to buy and things to pack in the school bag.

If your children attend a Catholic or Independent Private school you will need to pay annual school fees, which are usually paid at the beginning of each term. School fees vary widely. We talk about why we chose Catholic schooling in Sydney here.

Extracurricular activities

A few months ago we discussed extracurricular activities and seasonal sports in Australia. Most children we know attend swimming lessons and at least one other sporting or musical activity. We’ve provided some example costs in this article: Extracurricular activities in Australia.

Gym \ Socialising

We don’t know many parents that have much money or time for socialising; however costs you might want to cover are Gym membership and other fitness classes and activities.

In Sydney we pay $43 per fortnight for Fitness First membership, and around $18 per class for other exercise classes (Yoga \ Pilates).

Mum has a coffee budget of $25 per week; this covers the mid-morning caffeine addiction!

What will your Australian family budget look like?

In this article Mum has listed the monthly expenses you might need to consider when planning your move to Australia. We’ve highlighted a few differences you might experience between your family budget here and in your country of origin.

How you choose to spend the household income is personal. We have chosen to avoid the common but important question of “How much do I need to earn to live in Australia?”. This question is too tricky to answer, but our article demonstrates the costs families need to consider. We recommend you complete further research and read the articles we’ve linked to, to analyse exactly how much your monthly expenses are going to be and therefore what income your family needs.

The cost of living is high in Australia, but in our experience it isn’t disproportionate to the salaries available and the lifestyle many people enjoy.

If you’ve relocated to Australia and are in charge of the family budget, how is it going? What are your experiences and comparisons with your country of origin? Do you have cost cutting tips to share? Please add your comments below and help other families moving to Australia. Thank you.

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TorFX