Australians are being urged to take simple, immediate steps to protect their finances after the Reserve Bank of Australia (RBA) delivered its third-consecutive interest rate hike. With the cash rate lifted 25 basis points to 4.35 per cent, experts warn the move could be 'the straw that breaks the camel’s back' for households already under pressure, raising fears of a deeper economic slowdown.
Growing recession concerns
While Australia has not yet officially entered a recession, concerns are mounting about what further rate rises could mean for households. Financial comparison company Canstar data insights director Sally Tindall said the real-world impact could be severe.
'Broadly speaking, a recession is where it’s such severe economic hardship for households and businesses that layoffs start happening, and they start happening en masse,' Tindall said. As uncertainty builds, she identified several key areas Australians should focus on immediately.
Cutting back debt before it snowballs
Tindall emphasised that the first priority should be tackling high-interest debt, particularly credit cards. 'When the economic winds change, the last thing you want to be holding is high-interest debt, credit card debt, personal loans, even buy now, pay later debt,' she said. 'It’s really important to knock it down as quickly as possible, but also don’t add to it.'
She also warned against relying on credit cards for essentials such as groceries, as doing so can quickly spiral into a long-term financial burden.
Building a buffer while you still can
Having savings to fall back on, Tindall said, is critical if conditions worsen. While the Australian Securities and Investments Commission recommends keeping three months’ worth of expenses, she said Australians should aim higher if possible.
'Job security isn’t guaranteed in a recession. You really need a decent wad of cash behind you just in case you hit tough times and lose your job,' she said. She recommends building up to six months’ worth of expenses as a safer buffer.
Protecting your income in an uncertain market
Tindall said improving job security could be just as important as cutting costs. That could mean upskilling, reskilling, or moving into more stable industries.
'Think about what is AI proof? What is recession-proof?' she said. Fields such as healthcare, education, and aged care are often more resilient during downturns, while taking on extra work in the short term can also help build savings faster.
