Keep an eye on your cash flow with careful financial planning

As cost-of-living and inflation bite Australian households, taking control of your finances with strategic cash flow management will ease your financial stress and also help set you up for the future.

Inflation is hitting us all in the hip pocket as the cost of living goes through the roof and things are getting tighter for household – and business – budgets.

According to the Australian Bureau of Statistics (ABS), in the March 2023 quarter, all five of the Living Cost Indexes (LCIs) were up. Prices for health, housing, food, energy, and insurance and financial services climbed across all household categories. 

Meanwhile the Consumer Price Index (CPI) was up 1.4% in the last quarter and rose 7.0% over the 12 months to March 2023. The most significant price rises were in medical and hospital services (+4.2%), tertiary education (+9.7%), household energy (+14.3%) and domestic holiday travel and accommodation (+4.7%).

It’s no wonder people are feeling the pressure and looking for ways to rein in their spending and invest their money more wisely – something we can help you with here at Poole Advisory.

How is the rising cost environment affecting you?

Whatever your financial stage in life – whether you’re saving, investing, retiring, a business owner, or holding a mortgage – today’s rising living costs are having an impact.

Savers 

High inflation erodes the real value of your savings and some investments. Essentially, the saver is losing money if the inflation rate exceeds the interest earned on a savings or cheque account or an investment.

Mortgage holders

It’s a double shot of pain for mortgage holders who are affected by both inflation and by the RBAs raising of the cash rate to constrain it. When the cash rate increases, banks raise variable home loan rates – and that has happened 11 times in the past year. Ouch!

Business owners 

Every aspect of a business is affected by inflation as higher costs for goods and services impact cash flow. You may need to pass on the rising costs to your consumers or absorb the rise as part of your own costs, affecting profitability and impacting future spending and investment decisions. Large expenditures may need to be put on hold or refinanced. 

Retirees

For people on fixed incomes, like self-funded retirees, rising inflation affects your bottom line more because you’re not earning a wage and benefitting from the upward pressure inflation puts on wages. 

Investors

Rising inflation means you may need to risk-adjust your portfolio by investing in hedge assets like real estate or real estate investment trusts (REITs), savings bonds, stocks, silver and gold, commodities, cryptocurrency and dividend-paying ASX shares.

What you should do to manage your money – if you’re not already! 

It’s time to look at your cash flow management, which – to financial advisors like us at Poole Advisory – is probably THE most important aspect of your journey with financial and retirement planning. 

Cash flow management will determine your income streams and your expenses, and identify surplus money to invest in short-, medium- and long-term priorities.

Government website MoneySmart advises tracking your spending will help you spend less and save more. 

Here are some tips to get you started:

1. Record what you spend every day for a month to understand where your money goes.
2. Track your spending with an app, like Frollo, or through card statements and cash receipts. 
3. Look at your spending habits and identify your hidden costs, like account fees, unused subscriptions and even mistaken transactions.
4. Spend more mindfully. Can you get it cheaper elsewhere? 
5. Separate your needs (essentials) from your wants.
6. Start a savings habit.
7. Create a budget to stay on top of expenses and save for the future (and stick to it!). Check out our handy tips in our budgeting blog post.
8. Contact a financial advisor who can help you plan further ways to save and grow your money faster.

What else can you do to cut costs and fight inflation?

• Look at your mortgage – can you refinance for a better rate?
• Examine your insurances – car, home, boat, personal and business. Can you get better deals? 
• Reduce other debts – like credit cards, student loans or personal lines of credit. Try to consolidate higher-interest debt at a lower fixed rate.
• Audit and minimise your energy usage. Compare providers and switch if you find a better deal.
• Shop smarter at the supermarket. Compare prices with apps like Frugl. Avoid impulse buys by purchasing online instead of driving to the store.
• Get a second job or start a side hustle to supplement your income.

A financial planner will know your best options to beat inflation

Knowing how to budget and invest in a time of inflation can greatly benefit your financial position – and at Poole Advisory it’s our business to show you how. 

We can talk you through – and help you implement – our favourite cash flow management and investment strategies to help you make the most out of the current inflationary financial climate. 

We offer a complimentary, obligation-free first meeting so we can analyse your money matters and help you grow your earnings – even in these challenging times.

For more information on how Poole Advisory can help you improve your overall financial situation, get in touch today or book an appointment. 

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