Ahh, the budget.
What a boring and dry topic.
It’s one of those things that I know is important but still resist.
Here is how I like to think about it.
Instead of thinking about Australia as a country, I like to think about it as a business.
It’s a business that I’m building my business (and wealth) inside of.
This business of Australia is telling us where and how it plans to spend its money for the next 12 months.
The budget is giving us the opportunity to get behind the tailwinds it’s creating.
Or… what potential headwinds to avoid.
In this year’s budget, it was revealed that power costs are going to rise nearly 50% in the coming years.
If your business uses a lot of power, doesn’t it make sense to look at how you can lower your power usage?
Or looking if getting solar panels is a viable move?
If you are paying attention while your competitors are not, this is one of the ways you can build an advantage.
My key takeaways from the budget
1 – Spending $40 million on improving our Visa processing capacity.
Not only are we bringing 200,000 new people into the country, but we will also do it quickly!
When I first read this, my knee-jerk reaction was
“Where are they going to live?”
We already have a massive undersupply of housing and a rental shortage.
I don’t see how this doesn’t put more upward pressure on property prices and rents.
Even in a higher interest rate environment, people still need a place to live.
2 – Inflation running higher and longer than expected.
Inflation was brought up many times across the budget.
Many election promises were delayed or scrapped in the concern that it could increase inflation further.
From my point of view, it’s a good thing that the government is working in line with the RBA to battle inflation.
We are lucky in Australia not to be getting hit as hard as other parts of the world.
(I’d like to keep it that way)
In my opinion, everyone needs to be paying attention to their personal inflation rate and have an investment strategy to protect any wealth they have built.
Please note this episode is not personal financial advice.
Speak to a professional who can understand your personal situation.
Back to inflation.
Any profit your business makes is being eaten away at 8% + per year.
For every $100,000 this year, $8,000 is being eaten away!
This is the one that concerns me… If you have investments.
Any investments you have must make at least 8% to maintain their purchasing power.
If you have money in a bank account earning 5% while inflation is at 8%, then you are going backward by 3% per year in real terms 😬
Inflation can be lethal.
Anyhow, this week on the podcast, Grant and I take a deeper dive into the budget and what it means for Australian business owners.
All information we share is NOT financial or investment advice and is purely intended for entertainment and educational purposes only. Always seek professional advice before acting on any financial decision.
00:00 Welcome to Business and Investing
03:02 Thinking of Australia as a business instead of a country
05:01 Rating the federal budget
09:58 The dominance of the inflation
17:52 What does it mean to have debt
27:44 The value of human resources for a country
30:05 How does the population’s growth affect property prices
38:45 Dealing with the cost of energy
42:28 Renting vs owning a home
44:53 Adjusting to the increased cost of energy
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