With inflation rates soaring and the cost of living rapidly increasing, more Australians are finding themselves in financial distress. According to the National Debt Hotline, the ongoing crisis is not just affecting low-income households but also dual-income families and retirees. Karyn Hicks, a financial counsellor with over a decade of experience, noted that the demographic of those seeking help has significantly shifted. “We’re now seeing a different cohort of people,” she explained. “The impact of the cost of living and those interest rate rises are really affecting people.”
The Strain of Rising Costs
Data from the Australian Bureau of Statistics highlights the sharp rise in living expenses. In the 12 months leading to the June 2024 quarter, Living Cost Indexes increased by up to 6.2%. Essential categories such as food, insurance, financial services, and housing were the primary drivers of this increase, following even steeper rises of up to 9.6% the previous year.
This spike in living costs has left many Australians searching for ways to tighten their budgets and navigate this challenging financial environment.
Tips from The Barefoot Investor
Scott Pape, author of the popular financial guide The Barefoot Investor, has been a go-to resource for Australians looking to manage their money more effectively. In an interview with ABC Radio Adelaide, Pape shared practical advice to help individuals tackle the rising cost of living:
Create a Bare-Bones Budget: Focus on essentials and cut back on non-essential expenses. By prioritizing necessities like housing, groceries, and utilities, households can weather tough financial periods without sinking deeper into debt.
Automate Your Savings: Pape suggests setting up automated transfers to a savings account, even if it’s a small amount. The key is to make savings a consistent habit.
Shop Smarter: With the cost of groceries rising, Pape advises looking for deals, buying in bulk, and considering generic brands over name-brand items.
Review Insurance Policies: As insurance premiums increase, Pape recommends regularly reviewing insurance policies to ensure you’re getting the best value. Don’t hesitate to negotiate or switch providers if better deals are available.
Negotiate Bills: It’s essential to review bills for services like energy and internet, and contact providers to ask for a better deal. Many companies are willing to offer discounts to retain customers.
Seeking Professional Help
For those in severe financial distress, seeking help from a financial counsellor can be a lifeline. Karyn Hicks and her team at the National Debt Hotline encourage anyone struggling with debt or financial hardship to reach out for free advice. These counsellors can provide guidance on managing debts, negotiating with creditors, and accessing government assistance where applicable.
The cost-of-living crisis is affecting more Australians than ever before, but with practical strategies and professional support, individuals and families can take control of their finances and begin to build a more secure future.
