Ever since inflation started its upward spiral in 2021, many, if not all Australians, have felt its impact to some degree or another.
Just last weekend, I put fuel in my car – it had been running on empty for a few days. At $2.25 a litre, this was around 60% more than I was paying for the same litre back in 2021.
But, of course, it is not fuel that is the culprit here.
Many of the basics, including food, mortgage interest, rent, housing prices and health care, have all been increasing significantly.
Sadly, wages have not kept pace with inflation, so it is becoming increasingly harder for many Australians to get by from one payday to the next. We also need to spare a thought for those living on a fixed income who don’t have the joy of any form of protection against inflationary pressures.
One glimmer of hope lies in the fact that inflation appears to have turned the corner and is starting to head back “south” again. Hopefully, it will be back to the Reserve Bank’s target range of between 2 and 3% in the not-too-distant future. Let’s hope prices follow.
Having said that, I think there is still some pain to be endured, with the likelihood of another one or two interest rate rises in the coming months.
So, what are ten things we can do to help weather the storm of increasing prices:
- Budget wisely – track income and expenses and identify areas where we can cut back.
- Cut non-essential spending – cancel unused subscriptions and memberships, dine out less frequently, and avoid impulse buying.
- Shop smarter – look for discounted items, compare prices, and consider buying generic or store-branded items.
- Stock up on essentials – when items are on sale, particularly non-perishables, consider stocking up.
- Invest in skills and DIY – reduce the costs of home maintenance by spending time carrying out simple household repairs and maintenance rather than calling in contractors and tradies. YouTube is a great source of knowledge when it comes to learning to carry out simple jobs around the home.
- Explore alternative transportation – consider car-pooling, walking, riding a bike, or using public transport. Also, planning ahead of time can help reduce unnecessary trips.
- Refinance high-interest debt – consider refinancing or consolidating loans to a loan with a lower interest rate.
- Build an emergency fund – having some money set aside for emergencies can provide a very welcome safety net and reduce the reliance on using debt to manage unexpected expenses.
- Invest wisely – reviewing current investments to ensure they are appropriate for the times. If money is being held in low or no-interest savings accounts, consider moving money not needed for everyday expenses to an account that offers a higher rate of interest. Always consider seeking the advice of a financial planner to help select appropriate investments.
- Earn extra income – whether it is doing overtime, taking on a second part-time job, freelancing, selling unused items, or even renting out a spare room, there are lots of options to consider when it comes to generating additional income. Even for those who have retired and are receiving the age pension, part-time work can provide a significant boost to income without detrimentally affecting the rate of pension being received.
Managing finances in tough times can be difficult. Making some small changes to the way we live may result in some short-term hardship; however, it just might help in navigating the current challenges being faced by so many Australians.
By Peter Kelly on 8 November 2023
PK believes people have the right to accurate, affordable and unbiased information that addresses all aspects of their preferred retirement lifestyle, thereby giving them the opportunity to make informed decisions that will empower them to live out their lives with dignity, certainty and security.
Tealey’s ambition is to change how people think about their retirement, he wants people to dream, plan and realise retirement is not defined by a magical age prescribed by the legislation.
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