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It’s been a tough few months financially, hasn’t it? With high inflation and interest rate hikes, more Australians have entered the year with greater financial stress and uncertainty. But it’s not all doom and gloom.

It’s clear that families are already re-evaluating their budgets and making hard decisions. November to December retail figures show rate hikes and high inflation have started to bite, with clothing, footwear/accessories and department stores to take the greatest hit. 

Even then, there’s likely more that we’ll have to do to see this year out with our finances intact. 

Alon Rajic, founder of Money Transfer Comparison, says households and small businesses will make more hard decisions this year to cope with the new financial and economic environment. Here are 9 things Alon says families should keep in mind 2023…

Move jobs for better pay or more flexibility

More Australians are choosing to leave their existing employment for a change of scenery or better workplace. The beginning of 2022 saw the highest annual job mobility rate in the last decade, with more than a million Australians changing employment and 2.1 million either choosing to leave or losing their jobs. The 3.1 per cent rise in annual wage growth in Australia was outpaced by the increase in consumer prices at 7.8 per cent by late 2022. It should come as no surprise that more than 12 per cent of Australians are opting for jobs that allow more flexible work arrangements or a higher pay. Alon expects this figure to grow in the next 12 months.

More savings will go into high-interest savings accounts

Cryptocurrency crashes, share-market volatility, declining property prices, rising interest rates and skyrocketing inflation have disrupted traditional ideas of safe-haven investments. In this year of uncertainty, more people will increase their savings – and will look for safe, high-return methods to help them. Research shows 47 per cent of Aussies believe high-interest savings accounts and superannuation will be the best places to put their money, outranking investment property, shares and crypto.

More Aussies will switch from traditional banks to non-bank fintech services offering more value

Even before the RBA began raising rates, banks were increasing fixed-rate loans in anticipation. As a result, loan rates are now sitting 4 to 5 per cent higher than the RBA cash rate. More rate rises this year are likely to drive Aussies to seek out smaller non-bank fintech services that offer better deals, including lower exchange rates and fees, than traditional banks. These may include lenders, specialist international money transfer platforms, virtual credit cards, and insurers. Money Transfer Comparison’s own research found that nearly three quarters (71 per cent) of Australians say they have lost at least some trust in banks due to their high loan rates and fees.

Mortgage refinancing will grow this year

With interest rates set to rise again in this first quarter of the year, it’s no surprise that roughly two million Australians are intending to refinance their current mortgage. More homeowners will look for a better deal on their mortgages, as two third of mortgagees will come off fixed-rate loans by the end of the year and feel the full impact of the last few months of rate increases. Home owners who refinance will not only seek a better interest rate, they are likely to develop a loan-repayment strategy with more flexible and multiple fixed-rate and variable loans to reduce their interest further and shorten their loan terms.

2 in 3 Aussies won’t look at AUD movements when traveling or spending overseas. While many households will tighten their budgets this year, research reveals a majority are still willing to put money aside for travel no matter how the Australian dollar performs. After being locked inside our borders for two years, this isn’t exactly surprising. If the Australian dollar dips, 62 per cent of Australians would still travel overseas. What’s more, 71 per cent would not avoid investing overseas.

Make passive income from personal assets

More Aussies will look to peer-to-peer services to generate a second and passive income stream by making valued and rarely-used assets available on rental platforms. For instance, Swimply, dubbed the Airbnb for backyard pools, allows Australians to rent their pool by the hour. Similar services have also been created for parking and storage spaces, motor vehicles and various kinds of chattel such as tools and machinery. Many Aussies will see these services as a way to make their rarely-used assets work for them, and are assisting the needs of others in the process.

1 in 3 SMEs will seek financing to get through a tough year

Many small businesses have also been hit hard by inflated costs including supplier goods, wages and petrol. In fact, 72 per cent of small businesses – who already survived through tough economic periods during the pandemic – have admitted they have been hit by rising expenses. A report on the top inflated expenses that businesses are challenged with found nearly one third (31 per cent) are having difficulty paying suppliers and petrol, and 26 per cent are struggling to pay wages. As a result, many businesses are likely to take out business loans to weather a tough year ahead.

Mixing business and personal finances to get through

As the risk of recession and higher interest rates climbs, new research reveals that business directors could borrow from their businesses or personal finances to survive, despite the potential risks to their financial security. In a potentially tough financial period, more than half (56 per cent) of Australian SME owners either have, or would, borrow funds from their businesses to solve personal financial issues, while 3 in 4 (72 per cent) would support their businesses using their personal savings or assets.

Consolidate debts

Borrowers will often take out a new personal loan to indemnify their existing debts, resulting in a single loan – and set of repayments – over a set period. By refinancing existing debts into a single loan, borrowers are afforded greater control over their finances. Debt consolidation simplifies the repayment process. In fact, it is the most popular reason for taking out a personal loan in Australia, with roughly 40 per cent of Australians indicating this as their reason for acquiring a personal loan.Amid rising interest rates, borrowers should compare the interest rate for the personal loan against your existing ones to ensure that refinancing will be worth your while.

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haven is all about family, life and style in Brisbane's inner city suburbs, the Gold Coast, south to Byron Bay. We have been keeping parents in the know for over eight years, with fun, fresh and helpful stories that they can take tips from or treasure in their own library.