Even in the best of times, it’s important that you do everything you can to make your financial life manageable. Yet with Australian inflation now exceeding 7% and so many people struggling to endure the cost of living, it’s more important than ever.
With that in mind, we’ll be sharing four ways to protect your personal finances against inflation in this article.
- Make a budget
The first step of any financial strategy is to set limits on your spending. List out all of your regular expenses, such as rent, energy bills and subscriptions. This will tell you how much disposable income you have left to work with, helping you live within your means.
Your budget will also determine how much money you’re able to use to fortify your financial position, either by paying off debts, investing or otherwise.
- Pay off your debts
With the cash rate recently raised to 2.85%, interest rates will likely rise as well. So, it’s vital you pay off your debts or you could soon find yourself handing over even more of your hard-earned money to your creditors.
Choose a strategy and stick with it long-term. Try using one of the popular strategies below:
- The snowball method – tackle your debts one by one, clearing them off from smallest to largest outstanding amount.
- The avalanche method – pay debts from highest to lowest interest rates.
Regardless of which debt-clearing strategy you choose, you should always make the minimum payments for all your debts to prevent them from piling up.
- Create a new income stream
If you have some free time, you can also pick up a side hustle. The exact nature of this extra work will depend on your skills, interests and the opportunities you have available.
All the same, there are plenty of accessible options that you can choose from, such as:
- Love your line of work? Start freelancing
- If you’re good with maths, why not try your hand at CFD trading?
- Pet lovers can start a dog-walking side gig
- Minimise your expenses
Even with a good budget in place, it’s wise to trim your discretionary spending wherever possible. Even small, seemingly negligible decreases will add up to make a significant difference.
Shop more strategically, by implementing the following tips:
- Choose generic or even ‘value’ brands
- Use coupons and store loyalty programs
- Set up membership cards
- Use comparison websites when shopping for services
- Cancel non-essential subscriptions
You don’t necessarily need to use all of the above methods but use as many as you can to give your personal finances more breathing room.
Protecting your personal finances takes thought and effort. But by following our tips above, you can get started on the right track.
Sarah King is a content writer from Australia with a passion for writing about Business and Personal Finance. Sarah’s work has been published on a wide range of sites covering a variety of topics.