The costs of living are rising. Is there anything I can do?

June 17, 2022

When talking to enable.me clients they felt 2022 started off OK. COVID restrictions were beginning to ease, there was the promise that borders would be re-opening. Maybe, they thought, we could finally take that holiday we’d been craving for the last two years.

Now though, many are wondering whether they can still afford that extravagant overseas excursion.

Rising fuel costs, supply chain issues, inflation. Every day we’re bombarded with the promise that living costs are on the rise. And there’s little hope that this will ease off in the coming months. With the RBNZ raising the OCR to try to combat inflation, interest rates are on the rise – right alongside all the rest. And, we’re all starting to feel the pinch.

So, where are they feeling it the most?

1.       They feel like they’re running out of cash faster and need to be deliberate about how they’re spending their money to make it last the distance

2.       They’re worried about our interest rates and how to best structure our mortgage

3.       Those who are nearing retirement are seeing their funds being eroded and wondering what they can do to protect what’s left (or whether there’s time for it to recover)

So, how can we protect ourselves – even just a little?

1.       Check what you’re spending on food. This is one of the most common areas of fritter and most people could cut out20% of their food cost with more considered spending. Stick to a budget, buy seasonally, and minimize waste.

2.       Mortgages. The question on everyone’s mind is – do I fix it for one year or two years? While it’s certainly different for every situation, for some it would make sense to fix it at a lower rate for a shorter period of time. This will lower your costs in the short term (leaving you with a little extra to spend on other necessities), and you’ll save more overall.

3.       Defer discretionary spending. This may not be the time to go on that luxury holiday, even though you’ve been hanging out for it for two years, after all. Defer it or if you really can’t bear the thought of another year without a holiday, see if there’s a cheaper option.

4.       Build your financial resilience. To help you weather these storms it’s good to have 6 months’ worth of living expenses available to you.

Hannah McQueen’s advice? “When you’re moving into uncertain times, you have to squeeze out all inefficiencies. If your expenses are increasing by 7% then we need to figure out how can we cut out 7% of our costs overall. And that’s through doing things less, or not doing them for the time being.”

The uncertainty we’re experiencing right now can be very unsettling. You’re probably wondering how the decisions you make now will impact your ability to pay for food, fuel, or a roof over your head – both now and in the months to come. But, it’s still important that people have a strategy in place for managing and growing their wealth.

Even with the current volatility, the idea of delaying financial decisions now could com eat a significant cost in the long run. So, when it comes to making decisions about what you’re going to do with your money, you should consider the short, medium and long-term impact of all the options available to you.

For help understanding your options and navigating the current financial landscape, it’s worth checking in with a financial coach. They can help you discover where you can cut out fritter, advise on the best way to structure your mortgage, and help build a financial plan that will allow you to weather the current market.

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