The cost of living in Australia has increased & is set to continue for the foreseeable future. Two key factors driving the cost of living are interest rate hikes (COST OF MONEY) to combat Australia’s 20-year high inflation rate & geopolitical instability affective energy supply/prices (ENERGY). With this in mind consumers are urged to be proactive and find ways they can save and soften the impact.
Interest Rates Rising in Australia
The Reserve bank of Australia (RBA) is dealing with the highest inflation rate in 20-years at 5.1% & in May increased the cash rate from historic lows by 0.25% with more hikes predicted. AMP’s head Investment Strategist and Economics and Chief Economist, Dr Shane Oliver is predicting the cash rate by the end of the year between 1.5% and 2%, that’s a large increase from today’s rate. This will mean mortgage holders will have less disposable income and need to prioritize their spending.
Rising Electricity Prices
In the first quarter of the year, the Australian Energy Market Operator (AEMO) said wholesale electricity prices went up a staggering 141% when compared with the same period last year. Australians have been warned to prepare for further rises, with power prices expected to jump by 40% over the next two years according to an energy analyst.
Both the cost of money (interest rates) and energy prices underpin the cost of living expenses (essential items) and a household’s ability to manage their budget.
Knowing What’s Ahead – Reduce Costs
Knowing what’s ahead, homeowners and businesses are encouraged to be proactive and look at how they can reduce their costs before it becomes unmanageable.
Finding effective saving solutions that have a large impact is difficult in this environment, however they do exist. Unfortunately when it comes to reducing your mortgage expense you’re reliant on finding a better rate which we definitely encourage. However when the underlying cash rate is being increased by the RBA it’s more about finding the lowest rate in a rising rate environment.
On the energy front it’s a different story, households can take full control of their electricity bill by becoming their own energy provider. Installing a solar power system allows households to reduce or eliminate the need to buy electricity at ever increasing prices.
Take Control of your Electricity Bill
Generating and consuming your own power provides complete energy control and pricing. Once a solar system is installed you’ve locked in your energy rate and depending on your solar solution after 4 to 5 years (system paid off) you have an asset that generates free renewable energy, no emissions and no electricity bill for the next 20 years.
An electricity bill is like rent, it never stops unless you buy.
Here’s a quick solar equation based on a quarterly electricity bill of $750 ($3000 per year).
- Renting electricity for the next 25 years: $3000 x 25 years = -$75,000
- Buying a solar power solution: $3000 (80% solar saving) $600 x 25 years = -$15,000
With solar you save $60K over 25 years, there aren’t many investments with returns/ savings as good as solar and well worth considering.
We’ve already seen a surge in demand for solar with the recent energy price rise. Households are looking to reduce their expenses and a solar solution can substantially reduce the cost of living.
Take the first step and get in contact, no-obligation free assement here