Five steps you must take

Five steps you must take in a downturn

Economic downturns are always tough on everyone in the community, but they are particularly tough for older Australians trying to get by on a fixed income, generated by their retirement savings.

If you are concerned as to how you will get by if prices and interest rates continue to rise, here are five simple steps you should take to help you get through the coming months.

Firstly, draft a budget of everything you spend your money on and then break it down into essentials you must spend your money on such as food and clothing and those things you really can get by without.

This will give you a good idea of how much you need to cut back to ensure you are not spending more money than your investments and age pension entitlements are generating.

Next, identify all those one-off discretionary expenses you were planning to make during the next twelve months. Now would be a good time to put those purchases such as travel or updating your home, off for a year or so.

Think about how you might be able to generate some extra funds. Under the Work Bonus Scheme for example, you can earn up to $7,500 from a bona fide employer and still receive your full pension entitlements.

If you are a couple that’s more than $1,000 a month in extra after-tax income and that will make a big difference to how easily you can get by during the next few months.

If you are still short of funds, have a good look in the garage and your spare room for things you can sell. Most Australian homes are full of clutter and need a good Spring clean of those things you no longer use.

More, there are lots of cost-effective avenues such as Facebook community pages and other on-line venues, where you can sell items quickly and efficiently without incurring significant costs.

Finally, keep in mind hard times don’t last for ever. It’s unlikely the looming recession, if it eventuates will be either long or severe and it is quite likely that by this time next year, things will be back to normal. Make sure you keep this in mind.