5 ways to adjust your finances to combat the high cost of living

Even if you haven’t kept a close eye on the news recently, it’s hard to escape the chatter about rising inflation and interest rates. Every time you turn on the TV there’s another news story about the cost of living crisis and how Australians are struggling financially. But what does this economic trend mean for you?

Whenever a change in the economy like this occurs, it’s a good idea to revisit your financial plan and make some adjustments. By tweaking your personal finances and investments, you can optimise your plan to ensure you and your family are still set up for long-term financial success. As an expert financial planner, Poole Advisory has put together an overview of the current economic trends and what they mean for you.

What’s currently happening in the economy?

The latest quarterly consumer price index figures show that inflation rose 4.3% for the year ending November 2023, down from the 4.9% increase reported in October. This figure suggests that, after a difficult year in 2023, inflation is finally on the decline. That being said, it is still well above the Royal Bank of Australia’s target, which is between 2-3%, meaning the cost of everyday goods is rising at a faster rate than we’d all like.

To make things even more difficult, the RBA has increased the cash rate to 4.35%, meaning your mortgage repayment could be hundreds or even thousands of dollars more per month than it used to be. Things aren’t any easier if you’re renting, with Australian capital cities seeing a 13% increase in rent over the past year.

What does this mean for you?

You only have to walk down the aisle of your local supermarket to see that prices are higher than they were a couple of years ago. Bread, milk, fruit, vegetables, meat – if you follow the same shopping list you’ve always followed, you’ll be forgiven for doing a double take when you see the total price at the register. Petrol, transport, internet, gas and electricity bills all have increased over the past 12-24 months too.

By the time you factor in your rent or mortgage repayment, you might find it difficult to set aside any savings at the end of the month. With the cost of living at record highs, it’s crucial you constantly review and adjust your financial plan. This includes your monthly budget, your spending habits, and any investments you have.

Financial planning


5 ways to adjust your personal finances and investments to combat the rising cost of living

With the cost of living on the rise, now is the time to review your financial plan. Here are some strategies you can consider to help combat rising inflation and economic turbulence.

1. Review your monthly budget and expenses

Start by closely examining your monthly budget. Categorise your expenses into two categories: needs and wants. Then take a close look through the “wants” column and identify items where you can trim costs. You don’t have to completely sacrifice your current lifestyle. However, finding small ways to reduce your spending can make a big difference.

For instance, consider brewing your morning coffee at home instead of paying $5 for it from a cafe. Or pack a lunch to take to work instead of buying it every day. Simply making these minor adjustments could save a substantial amount of money every month, especially if everyone in your household follows suit.

2.   Negotiate and shop smart

Conduct a comparison of your main monthly bills, such as gas, electricity, insurance, phone and internet. If a more economical service provider is available, consider making a switch. Alternatively, reach out to your current provider and ask for a lower rate. You’d be surprised how much you could save just by asking, especially if you’ve been a loyal customer.

When doing your regular grocery shop, try to plan your menu around the weekly specials, and fill up on pantry staples when they’re at a discount. You can also save money by filling up on petrol when the price is at its lowest point, which for most capital cities in Australia is Wednesday according to the ACCC.

3.   Consider investments that protect against inflation

When it comes to your investments, especially during times of rising prices, it’s smart to look at your portfolio with a strategy in mind. Consider spreading your money across different types of assets that historically do well when prices are going up.

We have a guide on inflation hedges, which outlines different investments that perform well during times of high inflation. By choosing the right mix of assets and keeping an eye on what’s happening in the market, you can make your investment portfolio more resilient to the challenges of a changing economy.

4.   Put your debt under the microscope

With interest rates on the rise, having substantial debt can cause financial headaches very quickly. Prioritise paying off high-interest rate debts, such as credit cards, to minimise the compounding impact of inflation on interest costs.

If you have a mortgage, you may want to consider refinancing to see if you can obtain a lower rate from your lender. You can also look at consolidating multiple debts into one, which could lower your total monthly debt payments and make things easier to keep track of at the same time.

5.   Consult a financial planner or advisor

Seeking professional guidance becomes even more important during times of economic uncertainty. A financial planner or advisor can provide personalised advice, helping you stay on top of your financial situation despite the complexities high inflation and interest rates bring.

If you’d like to speak to an experienced financial advisor in Bowral or the Southern Highlands, Poole Advisory can help. We have over 20 years of experience providing personalised financial advice to families, businesses, and high net wealth individuals in Australia. We can help you come up with a tailored plan to get on top of your finances and set yourself up for the long term. Find out more about the financial services we offer or book an appointment now.

Compliance Disclaimer:

This information contains general advice only, that is, advice which does not take into account your needs, objectives, or financial situation. You need to consider the appropriateness of that general advice in light of your personal circumstances before acting on the advice. You should obtain and consider the Product Disclosure Statement for any product discussed before making a decision to acquire that product. You should obtain financial or credit advice that addresses your specific needs and situation before making investment or borrowing decisions. Taxation information is based on our interpretation of the relevant laws as at 1 July 2018. While every care has been taken in the preparation of this information, Prosperitas Partners Pty Ltd does not guarantee the accuracy or completeness of the information. The case studies are hypothetical, for illustration purposes only and are not based on actual returns

Poole Advisory Pty Ltd ABN 15 642 040 604 is a Corporate Authorised Representative (No. 001282603) of Prosperitas Partners Pty Ltd ABN 30 662 654 453 AFSL 544 917

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