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How to deal with inflation In Australia

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How to deal with inflation In Australia

How to deal with inflation In Australia

inflation is everywhere. You can feel it at the grocery store when you pay your electricity bill, even when you fill your tank. Traveling, buying a car, and going out for dinner with friends cost more. many are finding it difficult to cope with the increased cost of living. But before we dive in let’s get to know what inflation is.

What is Inflation

inflation is an increase in the price level of goods and services in an economy. When the price level rises, each currency unit purchases fewer goods and services; Therefore, inflation refers to a reduction in the purchasing power of money.

How to deal with inflation

Ways to deal with inflation In Australia

 Review your budget

it’s time to create a budget if you don’t have one. but if you have a budget, it’s time to review it. A budget is a plan for your money. Without a plan, it’s easy to lose those hard-earned dollars. As the cost of things goes up, a budget can help you to make more informed and inflation-friendly decisions. During your review, look for ways to cut items. While there’s almost nothing you can do about the cost of rent or your mortgage, you might be able to reduce the size of your subscription or entertainment budget.

investment

One way to stay up with, or even surpass inflation is to invest a part of your income.

While rising interest rates or falling share markets may cause many people to second-guess themselves when making investment decisions, it’s essential to focus on long-term goals and avoid being influenced by short-term market volatility.

Having a diversified investment plan—money invested across many asset classes and in many industries—will help to cushion you from major share market falls.

Consider a cash-back credit card

While a cash-back credit card isn’t going to eliminate inflation, it can help you make extra money from your regular purchases. Cash-back credit cards allow earning 1% or 2% on purchases, and 5% or more on specialty purchases like travel, dining, or fuel. Before you get a cash-back credit card, have a plan for how you will use it. Don’t get another credit card unless you can pay it off in full each month. Look for a card that has no annual fee and offers cash back on purchases that make sense for you.

Create a meal plan

If you feel like you can’t feed yourself, it is because food prices are rising. As of January 2023, food prices are 11.3% higher than in January 2022. To save money on groceries without shunning snacks or a full meal, have a meal plan. Meal planning involves creating a schedule of what you are going to eat in a week or month. This ensures you only purchase the items you need. It can help eliminate unnecessary items from entering your shopping cart and reduce food waste.

Batch errands

Driving to work or doing numerous errands throughout the week might be costly with the current gas price. Try batching your errands so you can do them all in one trip rather than making multiple trips to the store every time you need something. The same is true whether you ride a ride-sharing service or public transportation. You can save more money if you can complete more tasks in one trip.

Invest in TIPS

Treasury Inflation-Protected Securities (TIPS) is a government agency designed to protect you against inflation. What distinguishes TIPS from other government securities is that the principal is not fixed. Instead, it can fluctuate with inflation. You can gain from increased income payments when inflation rises. TIPS comes in terms of 5, 10, or 30 years. The advantage is that you never run the risk of losing your initial principal investment because at maturity, you either receive the higher adjusted principal or the original value.

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