Five smart moves to help offset rising rates and inflation

Everyone is talking about interest rates rising, cost of living and inflation rising. At the same time we are also in a time of falling financial literacy, which means we know we should be doing something, we’re just not sure what.

Too often this means people financially freeze or stick their heads in the sand and pretend nothing is happening. But what if there was a better way? Here are five smart things you can do now to protect your finances as well as to give them a nudge forward.

1. Create an emergency fund

Prior to Covid, emergency funds or buffer accounts weren’t really talked about. When Covid hit, they were suddenly super sexy. That’s because having a pot of money in case of emergencies means unexpected repairs or illness don’t require you to dip into your credit cards and increase your debt load.

2. Live within your means

This is the secret sauce to having great finances. Too many people are trying to keep up with their peers and influencers who aren’t even buying the products they’re spruiking. Our advice? Unsubscribe, unfollow and unfriend and think about what’s important to you.

3. Find additional income

Too often we head straight to tightening the belt on expenses (which is important) but we don’t think about finding extra income. Whether that’s a second job, a side hustle, becoming a delivery driver, doing surveys online, renting out a room, or even completing your tax return – finding more income can be a great way to offset rising costs.

4. Offset for lower interest repayments

If you have a mortgage, speak to your bank about an offset account. It works this way: all extra money you have goes in there, reducing the principal you owe on your home, and therefore the interest you will pay each month.

5. Diversify your investments

Many people have a wage, a home, and superannuation, so the super balance is critical because that’s the only income source you’ll have when you stop working. So why not try something different? Try multiple income streams and diversification across property, shares and business so that if one falls the other is stable or rising.

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