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Weathering the Storm: 5 Tips for Budgeting During Inflation

Inflation in Australia has been hovering at alarming levels with wages squeezed and prices soaring to levels that many millennials had never thought possible. The situation is deeply unsettling.

It’s a good opportunity to take stock and baton down the hatches so that we can all come out of the other side without incurring huge debts. Careful budgeting is going to be key. Read on for our top budgeting tips to help you secure the best financial future.

Track Exactly Where Your Money Is Going

If you’re budgeting properly, you’ll know exactly how much money you have at any given point. There are plenty of online tools that can help you and you should make use of all available banking and credit card apps for starters.

Make a note of exactly when you get paid. If your employer allows you to choose, go for the 1st of the month. Switch all your direct debits and regular payments so they all get taken from your bank account 2-3 days after your salary date. It just helps to see at a glance how much of your hard-earned cash is available at any given moment.

Take a good hard look at your bank statements for the previous 3 months. Make a list of the following fixed and variable expenses:

  • Mortgage or rental payments
  • Insurance payments
  • Car loans
  • Credit card payments
  • Other loans and debts
  • Phone and internet charges
  • Commuting costs
  • Utility bills (eg: electricity/water)
  • Gym membership
  • TV subscriptions
  • Savings and/or holiday fund
  • Food and groceries from the supermarket
  • Clothing
  • Takeout and other entertainment
  • Gifts for special occasions

Give some budgeting thought about which costs are essential and which costs you could cut back on.

Make a Realistic Budget

Taking inflation into account, use your expense tracking data to create a realistic budget. You must include the rising cost of food, housing, and transportation. Get the latest inflation figures and use these to help make your budgeting calculation.

Here are some budgeting tips to help you control your outgoings:

  • Switch to a “make do and mend” wardrobe
  • Invest in a slow cooker to prepare meals in advance and avoid waste
  • Check out any free water-saving gadgets where you live
  • If you’ve not used something for over a year, sell it online
  • Only use your washing machine at 30 degrees and only wash full loads
  • Join a respectable money-saving online forum for the latest tips and tricks
  • If you’re a gym member, shower there
  • To avoid buying unnecessary grocery items, ensure you have a list of your items and purchase only what is on the list
  • Always shop for food when you’re not hungry
  • Trade in old smartphones you no longer use
  • Switch from public transport or the car to cycling and walking
  • Check “freecycle” groups where you live for free white goods/furniture
  • Pay down smaller debts first

Cut Back on Non-Essential Spending

Eating out is going to drastically eat into your budget as well as your diet. It’s one of life’s most expensive luxuries for mid-range wage earners. If you are dating or socialising with friends often, have a snack before you go out so you will order and spend less.

Check your TV subscriptions and ditch the ones you don’t use. Haggle with your phone and internet providers to ensure you’re on the best possible rate.

If you have several loans or debts with different banks or credit card providers, consider consolidating them all with one single loan at a better rate of interest. Get debt consolidation advice about this strategy from a reputable company that offers financial services.

If you have household or car insurance, make a note of the renewal dates. Never simply let these automatically renew. Always contact the provider and haggle them down to a better rate or switch. There is rarely a reward for loyalty these days and, in fact, auto-renewals often tend to be more costly.

Many banks are offering cash incentives to switch. Once you’re in control of your finances, it’s well worth considering doing this and is a lot easier than you might think.

You should also take advantage of any government aid that might be available. You may be eligible for relief on energy bills, for example. You can check out the latest information stemming from the federal budget for 2023-24 and assess how this will affect your financial future.

Build an Emergency Fund

Inflation can lead to some nasty surprises such as higher-than-expected medical bills or car repairs. You can help prepare for these by setting aside some money each month to offset any unexpected price increases.

You might be able to make your emergency fund go even further by investing and earning interest on it. Your goal should be to avoid getting into debt should any unexpected expenses crop up. If possible, aim for an emergency fund that will cover you for 3-6 months of living expenses.

Consider Investing

Inflation is going to put a dent in any savings you make over time. That’s unless you invest them wisely. Bank savings rates are unlikely to protect your hard-earned cash from inflation so it is in your best interest to speak to a financial planner for investment advice.

Stocks, bonds and real estate are options but they can all carry variable degrees of risk. You should always discuss any plans you have with a qualified financial adviser who will be able to explain what might suit your current situation and personal preferences.

A financial planner will be across all the latest market trends, especially when inflation rates are high. Bear in mind that investing may mean leaving your savings in some kind of fund for a long period of time.

Secure a Better Financial Future

During times of uncertainty, it’s always wise to have some budgeting tips up your sleeve. These can alleviate the impact of inflation and help you develop habits that will stand you in good stead for years to come.

We offer a range of financial services to help you make your money go further during challenging times. Get in touch with us today for the very best advice from PAC Financial.

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