Amidst a cost-of-living crisis in Australia, many households are adopting a lockdown budget strategy to cope with rising expenses. Similar to the sacrifices made during the COVID-19 pandemic, people are putting their social lives on hold, postponing holidays, and delaying major life events such as marriage and starting a family.
Data from Compare the Market shows that over three-quarters of Australians are making tough decisions to reduce spending in order to manage increasing living costs over the next year. Discretionary spending has decreased by 1.9% while essential services spending has increased by 2.3% in the past year. This trend is expected to continue in the coming months, with Australians planning to cut back on socializing and travel to save money.
The Reserve Bank of Australia (RBA) is set to make an interest rate decision based on the upcoming June quarter CPI figures. The RBA aims to combat inflation by encouraging households to reduce spending through higher interest rates. However, factors such as rising construction costs, rents, and insurance premiums are contributing to the cost-of-living squeeze.
Financial experts advise households to review their major expenses like mortgages, energy, and insurance to find potential savings. While it may be challenging to delay important life events or cut back on leisure activities, taking a disciplined approach to financial management can help navigate the current economic challenges and prepare for the future.
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Photo credit thenightly.com.au
