It really is tough at the moment.
It’s not the avocado toast that’s sending us into a spin, it really is tough out here at the moment.
Let’s look at some cold, hard facts:
In 2024
Quarter One
Cash rate 4.35%
In 1990
The highest the cash rate has ever been was
17% in January 1990
47.7%
of income goes towards housing cost
(56.3% if you’re in NSW)
42.45%
of income went towards housing cost
9.7 x
The national median house price is 9.7 times the average household income (13.8% if you’re in Sydney).
3.1 x
The national median house price was about 3.1 times the average household income.
How do we get through this?
- Cut Unnecessary Expenses:
- Identify areas where you can reduce spending, such as eating out less or canceling unused subscriptions.
- Consider creating a budget to track your spending and identify opportunities for savings. Doesn’t have to be fancy, handwritten or a simple spreadsheet can do it. Sometimes your bank’s website will even have something to help.
- Increase Your Income:
- Explore ways to increase your income, such as taking on a part-time job or freelancing.
- Consider negotiating a raise at your current job if possible.
- Build an Emergency Fund:
- Set aside money in an emergency fund to cover unexpected expenses, such as medical bills or car repairs.
- Aim to save at least three to six months’ worth of living expenses.
- Invest Wisely:
- If you do have some savings, consider investing it to help grow your wealth over time.
- Consider working with a financial advisor to develop an investment plan.
- Stay Informed:
- Stay updated on economic news and trends to make informed financial decisions.
- Monitor your investments regularly and adjust your strategy as needed, your financial advisor can help with this, too.
- Avoid Debt:
- Avoid taking on unnecessary debt, as high-interest rates can make it difficult to pay it off.
- If you have existing debt, focus on paying it off where it makes sense to.
- There is a difference between good and bad debt – not all debt is bad.
- Stay Positive:
- Maintain a positive outlook and mindset even during challenging times.
- Remember that this economic downturn is temporary and that better times will eventually come.
- Reach out for help if you need it. Money stress can eat away at you.
- Check out our post on money and mental health, which has a list of helpful resources: https://creowealth.com.au/money-and-mental-health/
By taking proactive steps now, you can not only survive this tough economic period but also position yourself for financial success in the future.
Remember that financial planning is an ongoing process, and it’s important to regularly review and adjust your strategy as needed.
Sources:
Real Estate Institute of Australia’s (REIA) Housing Affordability Report for the March 2024 quarter
https://www.seek.com.au/career-advice/article/a-guide-to-the-average-salary-in-australia
