August 11, 2022 Julie Hyslop

Cost of Living Pressure an Opportunity to Hack Expenses

Young happy mother going through home finances and communicating with her baby son.


There has been a lot written in the media recently about the rising cost of living and there is no doubt with rising interest rates people are having to tighten their financial belts. However, like the share market, the cost-of-living index has never been linear and has always been subject to continued fluctuations, both up and down.

Short- and long-term history can assist us in reframing the current media narrative and allow us to more broadly understand that cost of living calibrations is part of the economic cycle, some of the following historical facts highlight this:

– Throughout the 80s you were likely to be paying a mortgage rate about 13% to 14%.
– In 1909 a steak cost 5% of the average weekly wage

Ross Gittins, Economics Editor for The Sydney Morning Herald notes in his recent article ‘We’ve Got More Than We’ve Ever Had’ the drastic reduction in hours work for services that we have benefited from over the years:

– In 1909 the cost of a double bed, mattress, blanket, and pillows had fallen
from 185 hours of work to 18 hours today.
– The cost of a loaf of bread has fallen from 18 minutes of work to 4 minutes today.
– The cost of a smartphone has fallen from 60 hours of work in 2010 to
16 hours today.

The above facts are not meant to diminish the reality that some people are struggling to meet basic needs, but there are also those of us who the rising cost of living simply means less discretionary spending such as restaurant or take away meals. For those of us in this category, maybe this can be a time to recalibrate our needs and wants.

Taking a moment to put the financial brakes on it can allow us the opportunity and space to ask ourselves some redefining questions such as:

– Can I cook a healthy and simple meal rather than ordering in expensive take away.
– Can my children cut back on an after-school activity, and will this give us
more family time together?

In fact, the rising cost of living can provide a platform for us the do a ‘financial hack’ on our expenses, shining a light on expenses that have become a mindless habit that we no longer need, and may not even be making us any happier or healthier. The advantage of this is that we will adopt these new financial habits, and when cost of living pressures has stabilized, the extra money that we were spending can be redirected to savings and investments!

Referenced for this article:

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