KEY POINTS:
Kiwis are rethinking their budgets and getting creative about supplementing their incomes to meet the rising cost of living.
As well as the old favourites of buying supermarket specials in bulk and shopping around for the cheapest deals, they are flocking to budget advisers and are clearing out garages to see what they can sell on Trade Me.
The past few months have seen an increase in middle-income earners who have never previously struggled seeking budget advice, says Raewyn Fox, chief executive of the Federation of Family Budgeting Services.
"These are people who have lots of financial savvy, have tried lots of things and are at their wits' end."
The service is seeing more people with mortgages, especially those whose circumstances have changed since they took on their financial commitments.
Fox says the first thing the budget advisers will look at is whether households are taking home all the income they are entitled to.
Often people do not realise they are eligible for housing or accommodation supplements, childcare supplements or work-ing for families supplements, she says.
Budget advisers will then look at how clients can boost their incomes, Fox says.
"Quite a few families come to realise they are depending on one person for income. Maybe others in the family can get part-time jobs to supplement that."
Other options include using skills such as sewing, tutoring, cleaning, gardening or computing to earn money.
Fox says the service has also noted a steep increase in people selling possessions on Trade Me.
Trade Me's Mike O'Donnell says the online auction website has seen "solid growth", with 120,000 new items listed in the past three months.
The number of items in the surfing, windsurfing, camping, tramping, electronics and photography categories has grown, he says, as has the number of trampolines.
While O'Donnell says the website does not ask for reasons people are selling, the growth in these categories suggests people are starting to clear out their garages to see if they can make a buck.
Jane Robson, who set up Talented Mums late last year, says there is no doubt families are struggling to make ends meet.
Her company matches mothers with businesses looking for part-time workers. She says the number of mothers contacting her for work has increased around 50 per cent in the past two months, which she says is driven by the rising cost of living.
The founder of financial advice site getahead.co.nz, Jacqui Thomas, has noticed more registrations than usual in the past few months.
"People are looking for help, ideas and want to better their situation," she says.
Thomas says people need to think outside the square to keep up with rising living costs. She suggests that renting out a spare room to a boarder or language student, turning a hobby into an income stream or building a small business to offset expenses and taxes.
Thomas also tries to get people to look at what they are doing already that they can make money from.
For example, a stay-at-home mother could look at offering at-home childcare for one or two children and be paid for it. An avid television watcher could try ironing or stuffing inserts into papers while tuning into their favourite shows.
"It's about thinking what you could do, what you like doing and what you can get paid for," she says.
Personal financial planner Lisa Dudson suggests people looking at ways to save money should try to trade their services.
For instance, grandparents who pay for gardeners or lawn mowers could trade their babysitting services for an hour or so of their children's time in the garden. She says Kiwis are notorious for earning under the table but they should always make sure they are honest with Inland Revenue.
Kenina Court, director of accountancy firm Acorn Solutions, says there are two kinds of under-the-table income and it is important to understand whether you should be taxed or not.
Cleaning on a semi-regular basis would be regarded as having the intent to earn so needs to be declared, whereas babysitting every now and then would not.
A helpful rule of thumb is that if you earn $12,000 or more, it must be declared, she says.
Court warns tradespeople who take on the odd cash job to declare their work.
Inland Revenue looks for patterns in the incomes of businesses renowned for working under the table, she says. "They will have expectations of what someone should be earning."
Court says anyone looking to start a small business should go to an accountant who will make sure they are doing things correctly and will tell them whether there are any expenses they can claim.
GENERATING INCOME BY THINKING OUTSIDE THE SQUARE
Fatima Avdic set up an online hobby business two years ago and says it now generates enough income to pay for her holidays.
Being naturally creative and interested in craft, she set up www.decoupage.co.nz, taking people's old furniture and recycling, decorating and customising the pieces.
It doesn't take up a lot of her time - she works full-time during the week and can complete a couple of decoupage jobs during the weekend - but it does take good time-management skills.
While Avdic says she earns a comfortable $10,000 from the business, she does not recommend rushing into an online business.
It takes a lot of market research to ensure you make money rather than lose it and people often under-estimate the cost of setting up, she says.
As the cost of living increases, Avdic says it is nice to know she has an additional income stream so she can still go away on holiday without eating into her salary.
