The latest Australian Bureau of Statistics (ABS) household spending indicator data for January 2023 has revealed that household spending rose 17.8 per cent in January when compared to the same period last year.
According to ABS head of business indicators, Robert Ewing, the increases were led by spending on transport, which rose 41.5 per cent; hotels, cafes, and restaurants (up 38.5 per cent); and clothing and footwear (20.9 per cent).
Review your budget and savings
In times like this, revisiting your budget and adjusting your savings has never been more important. Now is the time to review your discretionary spending, such as credit card debts, eating out and multiple subscriptions. Some strategies that can help you manage your expenses and save money include:
- Set financial goals – let’s identify what you want to save for and how much you need to save. If you already have a financial plan in place, it could be time to review your plan and adjust accordingly to changes in your current situation
- Automate savings – setting up monthly automatic transfers will help you save consistently without a second thought.
- Using cash or a debit card – this is a great way to avoid credit card fees and debt accumulation
- Avoid impulse purchases – Before you buy something, ask yourself if you really need it. Wait a few days before making a purchase to see if you still want it and whether it fits within your budget
We can also look at ways to increase your income through investing. This can be a great way to generate rental income or build long-term wealth. Investing in real estate can be a smart financial move, and the current market conditions present a unique set of opportunities for people considering investing. With high rental demand, the growing population through migration and the current property market, there are plenty of opportunities for those who are well-positioned to take advantage of them. Read more about investing in the current market and why it’s a smart move.
It may be time for a home loan health check.
With this increase in household spending along with consecutive rate rises since May last year and many Australians coming off a fixed rate in the next 12 months, it’s never been more important to review your debt. There could be opportunities to save on your repayments through negotiating a better rate with your lender, refinancing or consolidating your debt. Our team have a deep understanding of the mortgage market and work with over 60 banks and lenders. We’re here to do the leg work for you and leverage our strong industry relationships to negotiate a great deal for you.
Economists from some of the major banks predict that consumer spending will decrease over the coming months as the infamous ‘rate cliff’ approaches and those who fixed their loans when rates were historically low are about to feel the pinch.
“We expect a continued slowdown in consumer spending over coming months, with the large volume of fixed-rate mortgages expiring this year adding pressure on household budgets from higher mortgage payments,” CBA economist, Beldina Allen commented.
The importance of debt management.
Now is the time to manage your debt responsibly, as excessive debt can impact your credit score and ability to obtain a mortgage. If you are currently on a high interest rate, debt consolidation is something to consider. This will allow you to save on your monthly repayments and free up cash for you in the long run.
We recently helped a client with a poor credit rating by consolidating their debt and reviewing their ability to save on an ongoing basis.
Our capacity to save has now been restored and we now have money to do things on a large scale. It has also set us up in a position to look at the next steps to improve our financial growth and position.
– Cassandra and Wayne Mckenzie
Our team of professionals can help you make informed decisions about your spending and borrowing. We can assess your financial situation and help you determine how much you can comfortably afford to spend on your repayments. This can help ensure that you don’t overstretch yourself financially and become vulnerable to changes in the market.
Get on the front foot with your finances and book in for a no obligation consultation.
Any information provided herein is of a general nature only. No consideration has been taken into your objectives, needs or financial situation. Before acting on this information you should consider if it is appropriate for your situation.