Don't Let Your Pension Increase Disappear

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Give the September Increase a Job Before Everyday Spending Swallows It

​From 20 September 2026, the next regular indexation of Australian pension rates takes effect. Pension rates are adjusted on 20 March and 20 September each year, although the amount each person actually receives depends on their individual circumstances, including income and assets tests.

For pensioners, any increase is welcome — particularly when groceries, utilities, fuel, insurance and other everyday expenses have all been putting pressure on household budgets.
But I want to suggest something before that first adjusted payment arrives.

Don't let the increase simply disappear.

It is incredibly easy for an extra $10, $15 or $20 a fortnight to be absorbed into normal spending without us ever really noticing it.

A few extra dollars at the supermarket.

A slightly higher electricity bill.

A coffee.

A prescription.

Petrol.

And suddenly the increase is gone.

Instead, when your first adjusted payment arrives, find out exactly how much your own payment has increased and deliberately give those dollars a job.

You may be surprised by what a relatively small increase can accomplish over a year.
​

​First, Find Your Actual Increase
Don't rely on the headline figure you hear on television or see on Facebook.

The Age Pension isn't one identical payment received by every pensioner. Rates can vary according to circumstances, including whether you're single or partnered and how the income and assets tests apply. Services Australia calculates the amount you're entitled to receive.

So when your first payment reflecting the September indexation arrives, compare it with your previous payment.

Write down:
Previous fortnightly payment: $________
New fortnightly payment: $________
My actual increase: $________

That's the number we want to work with.

It may be $10.

It may be $20.

It may be more or less.

The important thing isn't the size of the increase.

The important thing is what happens to it next.

Small Fortnightly Amounts Become Useful Annual Amounts
This is where the numbers become interesting.

An extra:
$10 a fortnight = $260 a year
$15 a fortnight = $390 a year
$20 a fortnight = $520 a year

Suddenly we're not talking about a few dollars.
We're talking about money that could cover a sizeable household expense.

And because you weren't receiving it before, there's an opportunity to direct it somewhere useful before your everyday spending adjusts to having it.

This is one of my favourite ways to build financial breathing room.

We don't necessarily need to find hundreds of dollars all at once.

We capture small amounts when they become available and give them a purpose.

Option 1: Build the Pantry Buffer
With food prices still putting pressure on household budgets, part or all of the increase could go towards your three-month pantry goal.

Suppose your pension increases by $15 a fortnight.

You could deliberately allocate $10 to pantry building and $5 to another goal.

That $10 doesn't mean throwing random groceries into the trolley.

Use it strategically.

Watch your Price Book.

Wait for genuine specials.

Then use the money to fill pantry gaps.

Perhaps this fortnight it's:

• milk powder
• flour
• rice
• pasta
• tinned tomatoes
• canned fish
• beans
• baking ingredients
• toiletries
• cleaning products.

Next fortnight it might be something different.

Over a year, that $10-per-fortnight pantry allocation becomes $260 worth of food and household essentials, ideally bought at your best prices rather than when you're desperate for them.

That's not hoarding.

That's moving some future grocery spending into today's budget in a controlled way.

Option 2: Start a Utilities Sinking Fund
Electricity, gas and water bills have an annoying habit of arriving whether the budget is ready or not.

A small amount put aside every fortnight makes them much easier to handle.

Imagine putting $15 per fortnight into a utilities fund.

After three months you'd have around $90.

After six months, about $195.

After a year, $390.

That may not cover every utility bill, but it certainly takes the sting out of them.

If you're already putting money aside for utilities, simply add the increase to your existing amount.

This is exactly what sinking funds are designed to do: turn large irregular bills into small regular amounts.

Option 3: Build a Medical and Pharmacy Buffer
Medical expenses don't always arrive conveniently.
There are prescriptions, dental appointments, glasses, hearing costs, specialist visits and all sorts of health expenses that aren't necessarily predictable.

Even $5 or $10 a fortnight set aside can create a useful little medical reserve.

The important thing is to keep it separate from ordinary spending if possible.

Then when an unexpected pharmacy or medical bill arrives, you have something waiting for it.

That's one less expense that needs to come out of grocery money.

Option 4: Get Ahead on Rates
For homeowners, council rates can be one of those large bills that puts pressure on the budget when it arrives.

Use part of the pension increase to start building the next rates payment.

If rates are $1,800 a year, that's around $69 a fortnight.

Perhaps you're already putting $60 aside.

An extra $9 from the pension increase could close that gap.

Suddenly the increase isn't simply extra spending money.

It's helping turn a future big bill into a bill that's already funded.

And there is enormous peace of mind in opening a bill and knowing the money is waiting for it.

Option 5: Build Your Emergency Cash Buffer
If you don't yet have much emergency cash set aside, this could be a wonderful opportunity to start.

Don't worry about trying to save thousands immediately. 

Start with $100. Then $250. Then one week's minimum household expenses.

An extra $20 a fortnight would build the first $100 in just five payments.

Once you've reached $100, keep going.

The goal isn't to accumulate money for the sake of it.

You're buying time.

If the car needs a repair, the fridge stops working or another unexpected expense appears, you have options other than immediately using credit.

Option 6: Pay Down Debt
If you're carrying debt, directing the increase towards it means those extra dollars can continue working long after this year's indexation.

Even modest additional repayments reduce the balance and, where interest is being charged, may reduce future interest too.

You could add the whole increase to your regular debt payment.

Or split it.

For example:
$10 — debt
$5 — pantry
$5 — emergency savings

There isn't one correct choice.

Choose the job that gives your household the most breathing room.

You Can Split It
You don't have to choose only one goal.

If your increase is $20 a fortnight, you might decide:
$5 — pantry
$5 — electricity sinking fund
$5 — medical fund
$5 — emergency cash

That's only five dollars going into each category.
It doesn't sound particularly impressive.

But after a year each category would contain about $130.

That's:
$130 worth of pantry supplies.
$130 towards electricity.
$130 towards medical expenses.
$130 in emergency savings.

Together, that's $520 deliberately directed towards strengthening the household.

Small amounts become meaningful when we repeat them.

Or Use the Snowball Method
Another option is to concentrate on one goal at a time.

Perhaps your first target is a $250 emergency buffer.

Send the whole increase there until you reach $250.

Then redirect it towards the pantry.

When the pantry is where you want it, move it to rates.

Then perhaps debt.

The amount stays the same.

Only the job changes.

This can be particularly motivating because you see individual goals being completed more quickly.

Don't Automatically Add It to the Grocery Budget
This may sound surprising coming from someone who talks about groceries as much as I do.

If your grocery budget genuinely needs the extra money, then absolutely use it there.

Food is essential.

But don't assume that's where the increase must automatically go.

First ask:
Can I protect the grocery budget another way?
Could you build the pantry when staples are half price?
Could you cook one more meal from scratch?
Could you use what's already in the freezer?
Could you MOO something you normally buy?
Could you reduce a large recurring household bill instead?

Sometimes putting an extra $15 into the grocery budget every fortnight simply allows grocery spending to quietly expand.

Putting that same $15 into a pantry buffer at sale prices may make it work much harder.

Make the Decision Before 20 September
This is the easiest part.

You don't need to know the exact amount yet.

Simply decide where your increase will go when it arrives.

Write: When my pension increases, I will use the extra money for:

Then when the first adjusted payment reaches your account, calculate the actual difference and set up the transfer or allocation.

If possible, make it automatic.

If $15 is going to your emergency account, set up a $15 automatic transfer each pension day.

If it's for the pantry, add $15 to your pantry-building envelope or grocery sub-account.

That takes willpower out of the equation.

What If You Really Need the Increase for Everyday Living?
Then use it.

There is absolutely no failure in that.

The entire purpose of indexation is to help payments keep pace with changes in living costs.

If groceries, rent, medication, fuel or electricity have already swallowed up that increase before it arrives, then directing it to those essentials is giving it a job.

The important thing is knowing where it is going.

Perhaps your plan is simply:
“This $18 a fortnight will cover the increase in my prescriptions.”

Perfect.

That's deliberate.

And that is very different from having the extra money disappear without knowing where it went.

Your September Pension Increase Challenge
When your first adjusted payment arrives after 20 September 2026:
1. Compare it with your previous payment.
2. Find your actual fortnightly increase.
3. Multiply it by 26 to see what it represents over a year.
4. Decide where those dollars will do the most good.
5. Transfer or allocate them immediately.

And write the result somewhere visible.
My increase: $________ per fortnight
Annual value: $________
Its job: ________________________
That's it.

Don't Underestimate Small Amounts
Living the Cheapskates way has never been about waiting until we have enormous amounts of money before we make progress.

It is about recognising the value of the dollars already passing through our hands.

Ten dollars matters.

Five dollars matters.

Twenty dollars certainly matters.

Not necessarily because of what it buys today, but because of what repeated small amounts can accomplish over time.

So when the September pension increase arrives, enjoy knowing there is a little more breathing room in the household budget.

Then give those extra dollars somewhere useful to go.

Don't let them disappear.

Let them build food security.

Let them pay a future bill.

Let them cover medication.

Let them build emergency cash.

Let them reduce debt.

Let them buy you a little more peace of mind.

That's when a small fortnightly increase can become something much more valuable.

Live well. Spend less. Stress less.