Financially, times are pretty tough — and they're not expected to get much better anytime soon.
Reserve Bank governor Philip Lowe says a recession is not on the cards in Australia. Others reckon there's a chance we could be hit with a short recession sometime next year.
But one thing's for sure right now: millions of Australians are hurting due to the rising cost of living.
So, how can we prepare for any financially tough times ahead? We asked three experts.
First of all, you should know that you're not alone
Before we get into it, National Debt Helpline financial counsellor Deb Shroot says no matter how bad things get financially, there are always options. Even when things seem really bad.
"If you speak to a financial counsellor, there are always options," she says.
Basically, financial counsellors are professionals who help those in financial difficulty and their services are non-judgemental, free, independent and confidential.
"The options might not all be desirable, however, we can talk you through all the pros and cons," Ms Shroot says.
"Then you can decide what is the next best step for you."
She says it is important not to wait to ask for help.
"The sooner you engage to get help, the more options are that are available to you."
She says people from all walks of life started reaching out for help in greater numbers following the increase in petrol prices in February.
"So we get contacted from all different walks of life, people in all different, different situations," she says.
Start preparing now, if you haven't already
You should get on the front foot with your finances as soon as possible, according to financial planner Olivia Maragna from Aspire Retire.
She says it's one of the best ways to avoid future pain.
That's because it is easy for things to get out of hand before people take steps to get their finances under control.
"People — who aren't necessarily in denial because they know it's getting worse — leave it until later before actually tackling the issue," Ms Maragna says.
"You don't want to be in a position where you're forced into having to do something."
Talk to your bank about your mortgage repayments
Ms Maragna says mortgage holders should speak to their bank and negotiate a lower rate if they're feeling the squeeze following interest rate rises.
She says clients have recently managed to score a 0.4 per cent drop in their interest rate.
"I've found that out of the times clients have done that, they've got a better interest rate, at least a good 0.4 per cent drop in their interest rate," Ms Maragna says.
"That's not changing banks, that's just asking for a better rate."
She said those with mortgages should also contact their bank if they are struggling to make repayments.
"Banks generally have processes for people who are in financial hardship," she says.
"They will just go through the process with you, maybe put you on a payment plan or assist with interest rates or things like that."
Writing down your budget can help you feel in control
It might be tempting to put it off for another couple of months, but organising your budget can make you feel like you've got a good handle on things.
That's according to Di Johnson, a personal finance lecturer at Griffith University.
"Planning for expenses, documenting expenses and debts can help in getting a sense of control," Dr Johnson says.
"Writing down your current outgoings in terms of everyday household expenses and all debts mortgage, personal loans, credit cards, buy now pay later, payday loans, loans from friends and family — can help with planning just by documenting it, to see what is already covered and priorities for chipping away at others."
Look at what you can cut back on
Once all of your expenses are listed in your budget, Ms Maragna says it's a good idea to go through each and every item and look for a better deal.
That includes services like electricity, internet, gas and subscriptions including streaming services and gym memberships.
"Don't wait for interest rates to increase, it’s a matter of looking 'where can we actually cut back?' " Ms Maragna says.
"Check health insurance, see what you can cut back on or reduce. Call every service provider to see what you can reduce.
"There doesn’t appear to be relief coming anytime soon. This is something for the next six to 12 months we should consider as the new norm.
"Look at every dollar that goes out the door."
Break up large payments into regular chunks
"Smoothing out" larger annual payments like car registration or insurance and setting up monthly direct debits can give you a clearer picture of your finances, Ms Maragna says.
Dr Johnson agrees. She says it also takes the mental load off regular expenses.
"So that you can think more clearly about broader goals," she says.
Find more income through odd jobs and second-hand sales
Cutting back on expenses is all well and good. But in tougher times people need to resort to looking for additional income.
"I think people have to resort to really, you know, looking beyond what you would normally do in terms of during tough times," Ms Maragna says.
She said selling available second-hand items on hand is a good way to pick up "a few extra bucks".
And then there is looking for more paid work, including through online platforms and applications.
"Even the gig economy so in terms of people wanting some extra money," she said.
"You know, you can jump on a lot of these platforms now and do jobs on the weekend and earn yourself an extra couple of hundred bucks on a weekend.
"So I think people just need to explore all options in terms of trying to stay ahead. Because like I said, we're not at the end of the bad times, there's still more pain to come. It's got to be about thinking outside of the square."
Taking on debt is not the answer
Taking on debt to make up for budget shortfalls is one of the most common ways people get into financial difficulty, Ms Shroot says.
"For example, someone might not be able to afford their utility bill, so they might get out a loan. We usually find that starts what's called a debt spiral," she says.
"There is a high chance you might not be able to repay that.
But when you have hungry kids, have to keep the internet on for homework or need petrol to get to work, Ms Shroot says it can be easy to overlook dangers of taking on more debt.
"If you need to feed your child, then you're going to do whatever it takes to do that, even if there are consequences down the track," she said.
"So I guess our message for that is to seek help because there is emergency relief."
She says each state and territory has emergency relief programs.
"Where people can access fruit and other other vouchers to meet those basic needs," she says.
Savings are important. Although it's easier said than done
It'd be great if everyone could click their fingers and have a healthy savings account.
But having cash at hand is key to managing uncertain financial times, says Dr Johnson.
"While it's easy to say 'have a savings buffer ideally for three to six months of expenses', we know that is not always realistic," Dr Johnson says.
"Lots of people have been dealing with cost-of-living pressures for years now, some for decades, and even if average household savings is up, there is a great divide in income and wealth equality in Australia."
Ms Shroot says a three-month savings buffer is good general advice, adding that many people who contact financial counsellors have recently experienced an unexpected change in circumstances.
"You will definitely fare much better, because you don't know when these times are going to happen," she says.
"Broad stroke advice is it would be good to have three months worth of expenses, understanding that some people can't afford to put any money aside and are just living pay cheque to pay cheque.
"So that might, that might be really difficult. We don't want people to feel bad about themselves or a failure if they're unable to do that."
Talking to someone about your financial difficulties can help
Ms Shroot says it can be hard to speak openly about your personal finances, especially when time are tough.
However, she says talking about it can ease some mental load.
"Some people do feel a sense of failure if they're unable to provide for their families, or to ask for help when it comes to money," she says.
"So even just offloading for your mental wellbeing, it is very unlikely you won't feel better after speaking to a financial counsellor.”
"Speak to a financial counsellor, we're free, independent, and confidential. Even if it is just bouncing off an idea we're always happy to listen and even just help people work through their thoughts regarding money."
This article contains general information only. You should consider obtaining independent professional advice in relation to your particular circumstances.
