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  • Writer's pictureReal Finance

Seven strategies for staying ahead of inflation

Updated: Sep 2, 2022

at inflation with our seven greatest strategies that could put you ahead of your financial commitments

Recently we published an article about inflation where we shared some factors that can influence the inflation rate. If you haven’t had a chance to read the article, you can view it here. With inflation significantly driving up the cost of goods in Australia and worldwide, we’ll be sharing some strategies that can help you to keep up with it.

Strategy One – Review your mortgage commitments and interest rate

Are you a mortgage holder?

If so, there’s a good chance that you may still be able to refinance to a suitable interest rate from a fitting lender. While some of the major lenders are driving up their interest rates, there are still many who’re offering competitive offerings.

At REIF we have access to more than 40 lenders. If you'd like to refinance or review your financial commitments to source a rate that is affordable in the present times, our finance specialists/ brokers may be able to assist.

Strategy Two – Review other financial commitments

Do you have other financial commitments such as personal loans or investment loans?

When refinancing, you may be able to identify other commitments with your finance broker. Doing so could put you in a position to save a few thousand dollars each year. A finance broker may be able to consolidate all your financial commitments into one loan and reduce your combined interest and lending rates.

Strategy Three – Invest

Investing your wealth into passive income producing streams may be a suitable strategy to support you during times of inflation. At REIF, we’re firm believers in passive income (specifically real estate investments). Real estate investments are one the greatest hedges against inflation.

Opposed to stocks or other bond shares, real estate investments can work for you during inflation. Inflation can drive up rental costs. In turn, this can put more money back into your pocket. It’s always a good idea to consult a finance broker or wealth creation expert, like ourselves, who’ll source suitable interest rates to ensure your rental income exceeds mortgage repayment costs.

Strategy Four – Limit your wants

Limiting your wants is a great strategy for beating inflation
Limiting your wants is a great strategy for beating inflation

When keeping up with the increasing inflation rate, one of the most important things that you can do is limit your wants. Charlie Munger, the business partner of successful Warren Buffett suggests limiting your wants when trying to beat inflation. Munger states, “one of the greatest defenses to being worried about inflation is not having a lot of silly needs in your life.”

Strategy Five – Save your tax refunds

It’s tax time. While it may be tempting to go out and spend your tax refund, during times of inflation it may work in your favor to hold on to it.

There are various ways that you can save your tax refund. If you’re a mortgage holder with an offset account linked to your home loan, you could put your tax refund directly into that account and reduce the amount of payable interest that you pay against your home loan.

Additionally, you could put your tax refunds into a savings account or war chest. These funds can be used when money becomes tight, and you need to access it to cover important expenses. Another smart way to utilize your tax refunds during inflation is to pay off any other outstanding debts that you have.

Step Six – Re-evaluate your budget

If you created a budget 6-12 months ago, chances are it may not be feasible for present times.

Budgets are tools that need regular reviewing and updating. It’s important to do this every six month or when there are drastic economic changes. Take some time to evaluate your existing financial commitments and determine where your spending priorities will lie during inflation.

There are various budgeting tools available that can help you on your pursuit to levelling up your finances. For some more information on budget friendly tips, we suggest reading this article we wrote not long ago. To recap this article, some of our favorite tips are:

  1. Planning meals and making them yourself

  2. Shopping for savings

  3. Review your energy and gas providers

  4. Save money on car insurance

  5. Reviewing your lending

  6. Collating loose change

  7. Holding onto receipts for tax time

  8. Managing your energy consumption

Step Seven – Diversify your income

Relying on one stream of income is always a risky move. The average millionaire has seven streams of income. If you’re looking to diversify your income streams, we suggest looking into real estate investments as a suitable passive income stream.

REIF are experts in all things finance and property. Click the button below to download our free eBook, Building Wealth Through Property, to learn more about real estate investments.

In the video below, we share some of the above strategies for beating inflation.

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