Inflation Survival Guide: Tips to keep your finances afloat
You can’t read the news at the moment without noticing the alarmist headlines around inflation, it’s been the hot topic of conversation for a while now. No doubt you’ve noticed the rising cost of groceries, petrol and electricity. News of the price of a cup of coffee doubling in 2025 is enough to strike panic in every caffeine loving Aussie. Inflation is like that sneaky neighbour who always takes more than their fair share—it slowly chips away at the value of your hard-earned money.
But with smarter investing, you can stay ahead of inflation and keep your finances working harder for you. Let’s explore how.
Understand the Inflation Challenge
Inflation in Australia has been higher than usual recently, which means your dollars aren’t stretching as far as they used to. The Reserve Bank of Australia (RBA) aims to keep inflation in check, but even at 2-3%, it can erode your purchasing power over time. For example, if inflation averages 3% per year, something that costs $100 today will cost over $180 in 20 years. So, the question is, how can you make sure your investments grow faster than inflation?
Smarter Investing Strategies to Consider
1. Diversify, Diversify, Diversify
A well-diversified investment portfolio is like a balanced diet—it’s good for your financial health. By spreading your investments across shares, property, and fixed income options, you can reduce risk while aiming for growth. Shares, particularly those in growth sectors or companies with the ability to easily raise prices as needed without compromising sales, can outpace inflation over time. Meanwhile, Australian property has historically been a solid performer, although it requires careful research.
2. Think About Inflation-Protected Assets
Some investments are designed to keep pace with inflation. For example, inflation linked annuities. These annuities adjust their payouts based on inflation, helping preserve your purchasing power. Real estate investment trusts (REITs) can also benefit from rising property values and rents, which often move with inflation.
3. Consider Global Investments
Australia is a fantastic place to live, but sometimes looking beyond our borders can open up new opportunities. Investing in international shares or funds gives you access to companies and industries that may perform differently from our local market, spreading your risk further. It also adds currency exposure which can boost returns on international shares when the foreign currency strengthens against the AUD.
4. Don’t Forget Superannuation
Your super is one of the best tools you have to combat inflation. With tax advantages and the power of compounding, it’s worth reviewing your super strategy regularly. Do you have the ability to add more than your mandated super guarantee? Are you in the right investment option for your stage of life? Growth or balanced options may be better suited to outpace inflation over the long term, than more conservative options.
5. Stay Patient and Invest for the Long Term
It’s tempting to react to short-term market movements, especially when headlines are all doom and gloom. But history shows that staying invested and focusing on the long term is often the best approach to building wealth and beating inflation.
Ready to Get Ahead?
Inflation doesn’t have to derail your financial plans. With the right investment strategy, you can keep your money growing and protect your future lifestyle.
Michelle Sanchez ADFS(FP)
Representative (No 325471)
