Inflation is definitely the word of 2023, and Iām feeling it everywhere right now.
From the questions youāre sending us, the news headlines and the conversations Iām overhearing on the train, weāre all feeling the pinch right now (even if just a little bit).
But what can we do about it?
In this episode, Kate & Owen share ten ideas, from hacking your expenses to which companies to avoid, to help you feel more in control of your finances right now.
#1) Be the best at what you do
Itās time to make yourself indispensable at work and solidify your career this year. Upskill, put your hand up for a promotion, start putting a file of all the awesome things youāve done on the job together and figure out the basics of salary negotiation.
Plus, studying is a great way to spend less money š
#2) Get multiple sources of income
Having multiple sources of income helps you to be more resilient during periods of financial uncertainty. Consider whether you might be able to start a side hustle, even if itās solely to pay down debts or boost savings over a short period of time.
š” Want ideas? Owen & I shared over 20 ways our community has made some extra $$$Ā on a recent episode of The Australian Finance Podcast.
#3) Hack those discretionary expenses
Bye-bye Stan – hello savings! Itās time to get creative and make some room in your budget for your current priorities. Anything in your spending history from the last three months youāre not using? Bin it.
Get creative with lowering your bills! Group meal prep, fuel savings apps and energy bonuses are among countless ideas, and all those small cuts add up when your finances are tight.
#4) Update your budget
Stop trying to keep up with the Kardashians (at least, not until youāre the owner of a multi-million dollar business š). Give your budget a refresh to make sure it aligns with your current financial reality.
You might have to cut back on your savings and investing goals because things are tight, so be kind and realistic to yourself.
#5) Savers are being rewarded
Finally, those stashing away cash for their emergency fund, house deposit or dreamy Summer vacay goals, are getting rewarded, because many banks are paying between 4% – 5% on your hard-earned right now. Go find those high-interest savings accounts (or term deposits if that aligns with your financial goals).
ā ļø A note of caution: Itās important to remember that even though ING might be paying 5% per year on your savings right now, given inflation is at 7.8% this month, your purchasing power is still being eroded. Long-term investing (if that aligns with your goals) is one way to combat this.
#6) Invest in companies that can raise prices
As investors, weāre always on the lookout for high-quality businesses, and in an inflationary environment, itās important to consider whether the company can pass on the increasing costs of rent, production and wages to their customers.
Just think: if Apple raised their prices by 10%, would you still buy an iPhone when yours breaks? Alternatively, if one of your local coffee shops raised their prices, but wasnāt anything special, would you look at the other options or consider making coffee at home?
#7) Avoid investing in companies with high capital needs
Does the company youāre looking at have lots of inventory or needs to invest heavily in its current business just to survive? For example, Breville needs to invest in designs, manufacturing, shipping, postage and selling just to sell a toaster that may not need to be replaced.
On the flip side, a low capital needs business, like Xero or Apple, can probably just give customers 30 days’ notice, flick a switch and increase the prices of their subscriptions.
#8) Crush that mortgage (or hack it as much as you can)
If youāre not on a fixed-rate mortgage right now, I sympathise. The dust on one interest rate hike barely settles before the next one flows through.
So what can you do? Here are three ideas to consider:
- Call your bank or mortgage broker and negotiate your rate – go into this conversation having done your research
- Use your offset account wisely
- Add an extra $50 to your monthly repayments to pay off your principal quicker
šš½ Need a hand? Access top mortgage brokers in Australia via the Blusk + Rask partnership.
#9) Keep your investing habit alive
When it comes to investing, every little bit counts.
You might have to reduce your investing goals if your mortgage repayments have gone up/youāve lost your job, but keep the habit alive, even if itās just $5.
šø Take our 100% FREE Get Rich Slow course to learn more!
#10) Take a break from the news
Donāt pour over news headlinesĀ at the expense of your financial well-being.
Sometimes you just need to tune out the noise and focus on the options in front of you šļø
How are you managing the rising cost of living right now?
Let me and the Rask Core š community know about it by jumping into theĀ Community forum. It’s now only $9.99 per month to be part of Rask Core – cancel anytime!
