Many Australians are facing a cost-of-living crisis, leading them to adopt a lockdown budget reminiscent of the restrictions imposed during the pandemic. As the Reserve Bank board meeting approaches, average Australians are making significant financial sacrifices to make ends meet. During lockdowns, similar sacrifices were made to combat COVID-19, resulting in increased savings levels.
New data from Compare the Market shows that over three-quarters of Australians are planning to make tough decisions to reduce spending in the face of rising living costs. These decisions include socializing less, postponing holidays, delaying major life events such as marriage and starting a family, and even making lifestyle changes like moving to higher-paying jobs or working remotely.
While discretionary spending has decreased, essential services costs have risen, leading to a further decrease in discretionary spending over the next 12 months. The Reserve Bank of Australia (RBA) is challenging consumers to cut spending to combat inflation. By raising interest rates, the RBA aims to redirect income towards loan repayments rather than lifestyle expenses.
The hope is that these lifestyle sacrifices will help bring down the cost of living, but factors like construction costs and insurance premiums continue to surge. As Australian households focus on managing their financial budgets, it is important to explore ways to save beyond simply cutting back on expenses and delaying important life events. By examining bills such as mortgages, energy, and insurances, individuals may find opportunities to increase savings and improve their financial well-being.
Source
Photo credit thenightly.com.au