Taking it one week (or month) at a time

“We’re just taking it one week at a time.” 

If you’re a footy fan, you hear it every week. And you might be tempted to take the same approach with your finances at the moment, given how quickly the world is changing.

However, in the money world, I reckon the saying should be, “we’re just taking it one month at a time,” to fit in with the interest rate cycle.

Pundits, myself included, are widely expecting another 0.5% rate increase in August, and the ANZ Bank has said it’s expecting that trend to continue through September and October as well. But I’m thinking the RBA might opt to fall back to 0.25% in September, to just test the broader health of the economy.

As mortgage holders, we all know we need to be prepared for interest rate rises, which is why many among us are more concerned about our superannuation in the face of growing inflation. I’ve had multiple conversations recently where people have expressed concern about whether they have enough super to retire and still be able to live the life they choose.

These concerns are causing people quite a bit of anxiety, and that’s fair enough. Unlike the height of the pandemic, the government is no longer going to act as an ATM for anyone experiencing financial hardship, so it’s time to have an old-fashioned look in the financial mirror.

As advisers in times like these, our approach is pretty much always the same: it’s time to consider your income, your accommodation costs, and your other essential expenses. By cutting back on things that don’t make the essential list, you can actively cut inflation in your own home.