The Senior

The pensioner's guide to inflation-proofing your finances

So long as you're able to maintain a big picture approach to your spending and saving, you'll find that you can live comfortably during this inflationary period. Picture Shutterstock.
So long as you're able to maintain a big picture approach to your spending and saving, you'll find that you can live comfortably during this inflationary period. Picture Shutterstock.

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Australia's ongoing cost of living crisis has been impacting families and businesses across the country in a number of ways. As a result, many households and business owners have been amending their budgets to ensure that they are 'inflation-proof'.

Inflation-proofing your finances is really all about reassessing spending habits and making mindful investment decisions during periods of economic downturn.

Whilst couples and families with older children may have a little more flexibility with their finances, it can be a different story entirely for Aussies seniors.

So how can pensioners make sure their finances are as firm and inflation-proof as possible? We'll be outlining some of the top financial moves that'll help seniors live more comfortably in 2023.

Refinance your home loan

You don't want to be caught on the receiving end of high interest rates. That's precisely why many homeowners and property investors are revisiting their home loans in order to snag a better deal with other lenders.

Nowadays, there are plenty of deals available to savvy investors, spanning from Qantas Home Loans that come with the added bonus of Qantas Points, to line of credit or home equity loans, which are a great option for property investors.

Pensioners who are still making monthly repayments on a property should strongly consider refinancing their home loan to ensure that they're getting the best deal available to them.

If you do have 20% equity on your property, you'll likely have some bargaining power with any lender, as well as the freedom of choice to select between any home loans you find, either independently or through your broker.

Make inflation-proof investments

The key to making money in an inflationary environment is to make sensible inflation-proof investments, or inflation hedges. This means doing a little preliminary research to identify any potential stocks or other investment opportunities that won't be too heavily impacted by inflation.

There are a selection of different investments that most finance industry professionals consider to be 'inflation-resistant'.

On the top of the list is gold. The value of this mineral asset is a direct result of its short supply. As a result, gold is considered to be a fairly low-risk investment, and especially so during inflationary periods, as your ROI will seldom be impacted by the RBA.

That being said, gold can be a slow-growing investment as well, especially for those looking to jump into this market right now. Other inflation-proof investments include treasury or government bonds, real estate, and commodities like raw materials or agricultural products, both of which are currently performing well in Australia's market.

When investing in commodities, however, it's important to stay on top of current events, as global economic circumstances can impact the value of your investments. For instance, skyrocketing oil prices can be accredited to reduced production in Russia due to the ongoing Russia-Ukraine War.

Be a spend-savvy shopper

Grocery shopping is likely a big concern for pensioners at the moment, and especially so for any Aussie seniors who are living alone.

If you find that you're paying a lot more for your groceries and other routine household purchases than you were this time last year, you'll be happy to hear that you don't necessarily have to increase your budget in order to spend comfortably.

There are actually plenty of nifty shopping hacks you can use to make your weekly budget stretch that little bit farther, including shopping catalogue sales, and taking advantage of discounted or clearance items.

Similarly, purchasing whole fruits and vegetables rather than pre-packed options can also help save valuable dollars every week, alongside ensuring that you keep eating well throughout the cost of living crisis.

It's also a good idea to equip yourself with a general awareness of products whose costs have increased substantially. You can use the RBA's inflation calculator to get a better understanding of how the cost of your groceries and other weekly expenses have increased due to rising inflation.

Keep in mind too that grocery items like packaged and processed meats are growing more expensive due to their increasing production and importation costs.

Pensioners may be able to save big on their weekly shop by simply cutting down on their meat consumption, or even just opting to purchase their meat products at an independent butcher shop rather than at their local big name supermarket.

Assess your household energy usage

Alongside budgeting for your groceries, pensioners should also consider just how much their household energy consumption is impacting their finances. With the costs of electricity and gas going up alongside rising fuel costs, it's in your best interests to assess your household energy usage and take measures to reduce these usage figures wherever possible.

Even simple acts like putting your home heating and cooling appliances on timer settings and swapping outdated bulbs for energy-efficient LEDs can likely help you save hundreds of dollars with each quarterly utility bill.

Pensioners are also encouraged to seek financial assistance with paying your utility bills if they require it. Any pensioners using assistive technologies like CPAP machines, chair lifts, or power wheelchairs may be eligible to receive financial assistance with their utility bills through the NDIS as well.

Take advantage of off-peak travel deals

Finally, just because we're in an inflationary period, it doesn't mean that you have to put your retirement plans on hold. Seniors who are looking to travel during their retirement years should still feel encouraged to do so.

And with international travel deals coming back in full swing after years of COVID-19 travel restrictions, now is actually the perfect time to start doing a little shopping around in order to find some great getaway bargains.

We recommend consulting with a travel agent or jumping online to find some off-peak holiday deals. Pensioners looking to travel internationally will likely be able to find cheap flights to Bali, New Zealand, and other neighbouring countries.

And as for travelling domestically, booking flights and accommodation well ahead of time can likely see you saving hundreds of dollars on your next Aussie escape.

For Aussie seniors, inflation-proofing your finances doesn't need to be more complicated than taking an afternoon to reassess your investment portfolio and its risk tolerance, and making minor adjustments to your weekly budget and spending habits.

So long as you're able to maintain a big picture approach to your spending and saving, you'll find that you can live comfortably during this inflationary period.