commoncents Archives - CommonCents Financial Planning

Why Governments Love Inflation — and Why You Need a Plan to Deal With It

Nick Girle — Mon, 30 Mar 2026 06:27:50 +0000

Inflation affects everyone, but not everyone feels its impact in the same way. Why Governments Love Inflation — and Why You Need a Plan to Deal With It is a topic worth considering if you want to protect yourself financially.

While households experience rising living costs, governments often benefit from inflation in ways that aren’t immediately obvious. Understanding this dynamic helps explain why inflation is something individuals must actively plan for.

How Inflation Increases Tax Without Raising Rates

One of inflation’s biggest benefits for government is something known as bracket creep.

As wages rise gradually over time, tax thresholds often remain unchanged. This pushes more people into higher tax brackets, even when their real purchasing power hasn’t improved.

The result is higher tax revenue — without officially increasing tax rates.

Inflation and Government Debt

Inflation also reduces the real value of debt over time. A dollar borrowed today is worth far less decades into the future.

For governments carrying large debt loads, inflation quietly does much of the work in reducing that burden. From a policy perspective, a steady level of inflation is often seen as beneficial.

For households, however, the effect is very different.

What This Means for Your Financial Plan

For families and retirees, inflation steadily increases the income required to maintain a comfortable lifestyle — particularly during long retirements.

This is why portfolios that rely too heavily on fixed income assets such as Cash and Term Depsotis, can struggle over time. Assets that can grow in value and income — such as shares and property — are far better equipped to adapt to rising costs.

At the same time, balance matters. Too much growth exposure can create unnecessary stress. The goal is a portfolio that provides stability today while preserving purchasing power tomorrow.

Inflation quietly works in favour of governments, but against households.

Without a deliberate strategy, it steadily erodes income, savings and lifestyle. With the right balance of assets and long‑term planning, inflation becomes manageable rather than destructive.

Good financial planning isn’t about chasing wealth — it’s about giving you the confidence to enjoy your money, knowing it’s structured to last.

The post Why Governments Love Inflation — and Why You Need a Plan to Deal With It appeared first on CommonCents Financial Planning.

The Illusion of Safety — When “Low Risk” Investments Cost You the Most

Nick Girle — Mon, 23 Mar 2026 05:44:44 +0000

“I just want to play it safe.”

It’s one of the most common things people say when talking about their money — particularly as they approach retirement. Usually, “safe” means cash, bank accounts or term deposits.

While these options feel stable and reassuring, they often create a different kind of risk — one that doesn’t show up on your statement, but quietly undermines your financial security over time.

A Real‑World Example of Inflation at Work

In the early 1990s, a widowed woman received a $130,000 superannuation payout after her husband passed away. At the time, this was a significant amount of money. The average home in Toowoomba cost around $65,000 — meaning she could have bought two homes outright.

Concerned about economic uncertainty, she placed most of the money into term deposits. Interest rates were high, and in the first year she earned around $14,000 — close to two‑thirds of an average full‑time salary at the time.

It felt like a sensible, low‑risk decision.

What Happened Over the Long Term

Fast forward 35 years.

That same $100,000 now generates less than $5,000 per year in interest. Over the same period, everyday living costs have more than doubled, bread prices have more than tripled, and the average Toowoomba home is now worth around $670,000.

Her income fell dramatically while her expenses rose — not because of poor decisions in the moment, but because inflation quietly eroded her purchasing power.

This is the hidden risk of “safe” investments.

Understanding the Different Types of Risk

Market volatility risk is obvious and uncomfortable. Inflation risk is quiet and persistent and un-noticed.

Avoiding all risk isn’t possible. The real question is which risks you choose to manage.

Assets such as shares and property experience ups and downs, but they also tend to grow and adapt over time. Businesses increase profits and dividends. Rents rise gradually. These features help protect against inflation in ways cash simply cannot.

Diversification is key. Different assets play different roles — stability, income, growth and long‑term purchasing power.

True financial safety isn’t about avoiding uncomfortable market movements. It’s about protecting your lifestyle over decades.

While cash and term deposits feel safe, relying on them too heavily can expose you to significant inflation risk. A balanced strategy — one that accepts some short‑term uncertainty — often provides far greater long‑term security.

The post The Illusion of Safety — When “Low Risk” Investments Cost You the Most appeared first on CommonCents Financial Planning.

Why Inflation Is the Quietest — and Most Dangerous — Risk to Your Wealth

Nick Girle — Mon, 16 Mar 2026 05:12:08 +0000

When people think about financial risk, they usually focus on the big, dramatic events — market crashes, recessions, interest rate shocks or global uncertainty. These risks feel immediate and frightening, so they naturally get most of our attention.

But the most dangerous threat to your long‑term financial security doesn’t usually make headlines. It works quietly in the background, year after year, steadily eroding the value of your money.

That threat is inflation.

Inflation Is Not a Possibility — It’s a Certainty

From a risk‑management perspective, we always look at two things: the likelihood of a risk occurring, and the damage it can cause.

Many investment risks are possible but uncertain. Inflation is different. In Australia, inflation has existed every single year of our economic history. Some years it’s low and some years it’s uncomfortable, but it is always present.

That makes inflation a guaranteed risk, not a hypothetical one.

Because it happens gradually, inflation is easy to underestimate. A small increase in prices from one year to the next doesn’t feel alarming. But over long periods, those small increases compound into a significant loss of purchasing power.

Why Inflation Becomes Dangerous Over Decades

Most people don’t plan their finances over five‑year timeframes. Retirement planning often spans 25 to 35 years.

For couples approaching retirement in their early 60s, there is roughly a 50% chance one partner will live into their mid‑90s. That means your money needs to keep working for decades after you stop earning an income.

Over those timeframes, inflation becomes far more dangerous than short‑term market volatility. It steadily increases the income you need just to maintain the same lifestyle, while reducing what your savings can buy.

This is why inflation risk was identified as the most significant threat in a major Australian retirement income study — ahead of market crashes and economic downturns.

The Mistake of Focusing Only on “Safety”

Many people assume that cash and term deposits are low‑risk investments because their balances don’t fluctuate.

While they may feel safe in the short term, these assets offer little protection against inflation. Over long periods, money that doesn’t grow loses real (purchasing) value — even if the balance never goes down.

Managing inflation risk doesn’t mean ignoring volatility or taking reckless risks. It means accepting that some exposure to growth assets is necessary if your lifestyle is to remain secure over decades.

A well‑structured portfolio doesn’t eliminate risk — it balances different risks intelligently.

Inflation is quiet, predictable and relentless. Unlike market downturns, it doesn’t arrive suddenly — but over time, it does far more damage to purchasing power.

Protecting your wealth isn’t about reacting to headlines. It’s about planning decades ahead and ensuring your money can grow and adapt as the cost of living rises.

The post Why Inflation Is the Quietest — and Most Dangerous — Risk to Your Wealth appeared first on CommonCents Financial Planning.

Why Timing the Market Doesn’t Work

Nick Girle — Fri, 06 Feb 2026 07:45:00 +0000

Almost everyone has wondered whether now is the right time to invest. It’s a natural question, especially when markets feel unpredictable or the news cycle is full of dramatic headlines.

But the belief that you can consistently pick the ideal time to buy or sell is one of the most damaging myths in personal finance.

Missing the Best Days Can Cost a Fortune

A study looking at the 20‑year period from 2004 to 2024 paints a clear picture.

An investor who stayed fully invested earned strong returns. But an investor who tried to time the market and accidentally missed just the 10 best days saw their overall return drop significantly.

Miss the 50 best days, and the return wasn’t just lower—it was negative and they got back less than the original investment!

This happens because markets often rebound sharply after downturns. If you’re sitting in cash “waiting for the right moment,” you typically miss those rebounds.

Why Getting Back In Is So Hard

Selling during a downturn is emotionally easy to understand. But buying back in is far harder because you need to make two decisions, the first is when to sell but the second is when to buy back in.

Many investors who exited during the GFC stayed in cash for years afterward—not because they wanted to, but because they became anchored to the lowest point and waited for the market to return there.

The problem is that it never did.

What Works Better Than Timing

1. A long‑term mindset.
Short‑term movement is random. Long‑term trends are consistent.

2. Dollar‑cost averaging.
Regular contributions smooth your entry price and reduce emotional decision‑making.

3. Diversification.
A mix of shares, property, bonds, and cash helps manage volatility.

4. Review, don’t react.
Your portfolio should change when your life changes—not when headlines do.

A Simple Illustration

Consider two investors who each start with $100,000 in 2004:

Investor A puts it into a global share portfolio.
Investor B puts it in a term deposit after being confronted with significant losses during the GFC.

After 20 years:

Investor A has over $640,000.
Investor B has around $164,000.

Investor B avoided volatility—but also missed out on decades of growth.

The Bottom Line

Timing the market feels intuitive, but decades of research—and real‑world experience—show it simply doesn’t work.

The real advantage comes from staying invested, following a consistent plan, and focusing on long‑term goals rather than short‑term noise.

The post Why Timing the Market Doesn’t Work appeared first on CommonCents Financial Planning.

Why “Safe” Investments Aren’t Always Safe

Nick Girle — Fri, 30 Jan 2026 07:58:00 +0000

It’s natural to want safety when investing. After all, nobody enjoys uncertainty.

That’s why terms like “guaranteed returns” and “low risk” feel so appealing. But one of the biggest myths in personal finance is the idea that truly risk‑free investments exist.

At CommonCents Financial Planning, we believe that the truth is that even the safest‑seeming strategies carry risks—just not the kind you immediately see.

The Hidden Risk: Inflation

Term deposits, savings accounts, and government bonds don’t fluctuate like shares, which is why they’re considered safe. But they have another problem: inflation quietly eats into their value.

If your term deposit earns 5% but inflation is 3.5%, your real return is only 1.5%. And over years—even decades—that gap becomes significant.

A Real‑World Example

I once met a retiree who had kept $100,000 in a term deposit for nearly 20 years. Her hope was that the money would eventually be divided among her children to help them buy homes.

But the balance of course didn’t grow, it remained at $100,000. When it came time to distribute the money, each child received $25,000—not nearly enough to achieve what she always imagined.

She didn’t lose money on paper, but she lost a great deal of purchasing power.

Even Defensive Assets Carry Risk

Cash loses value when inflation rises.
Bonds fall when interest rates increase.
Government guarantees protect the balance—not your future buying power.

So while these products feel safe, they may not support your long‑term goals.

A Smarter Approach

The aim is not to avoid risk—that’s impossible. The aim is to manage risk properly.

1. Understand the risk‑return trade‑off.
Higher returns mean higher volatility. Lower volatility means lower growth. Both have a place that aligns with your purpose for investing.

2. Diversify across asset classes.
A balanced mix of shares, property, bonds, and cash protects you from relying on one outcome.

3. Review your strategy regularly.
Your needs change therefore your portfolio should change with them.

Safety Is Not a Product

It’s a strategy.

A genuinely safe financial strategy:

protects your long‑term purchasing power
manages market volatility
supports your goals
grows your wealth appropriately

Avoiding risk entirely usually creates a different – and often more damaging – risk: the slow erosion of your financial security.

The post Why “Safe” Investments Aren’t Always Safe appeared first on CommonCents Financial Planning.

The Wealth‑Building Myth Holding Too Many Australians Back

Nick Girle — Wed, 28 Jan 2026 06:50:53 +0000

Many Australians grow up believing that building wealth is something reserved for “other people”—high earners, business owners and those who were fortunate enough to inherit money. It’s a belief that comes up at family BBQs, in workplace conversations and even in the minds of clients who are otherwise doing perfectly well financially.

But here’s the reality: you don’t need to be wealthy to start building wealth.

And believing that you do often causes people to delay taking action.

Why This Myth Persists

When we think of “wealth,” we tend to picture the finish line. We imagine the big super balance, the investment portfolio or the financial freedom that comes later in life. Because we only look at the destination, we assume it must take huge resources to get there.

But almost all wealth is built the same way: small, consistent habits repeated over long periods.

The Power of Starting Small

A clear illustration of this is compounding.

If an investor puts away $5,000 a year and earns around 7.5% annually—a rate consistent with long‑term balanced or growth portfolios—they can end up with more than $500,000 after 30 years. No inheritance. No windfall. Just disciplined, repeated saving.

An even more powerful example:

Person A invests $5,000 a year from age 25 to 35, then stops.
Person B invests the same $5,000 a year from age 35 to 65.

Even though Person B contributes three times the amount of money, Person A ends up with more thanks to starting earlier and letting compounding do its work.

“But I Didn’t Start Early…”

The good news is that it’s never too late. Whether you’re planning for retirement, wanting to help your children or saving for a major life change, the same principles apply:

Start today
Be consistent
Give your money a purpose

Ten or fifteen years of steady saving and investing can still dramatically improve your financial position.

Why It’s Easier Than Ever

Today’s investment landscape is more accessible than ever:

Lower minimum investment amounts
Automated contributions
Easy‑to‑use digital platforms

You no longer need $100,000 to get started.

For households with above‑average incomes, this accessibility is especially powerful because you can direct meaningful amounts into long‑term strategies without compromising lifestyle.

Simple Steps to Begin

1. Automate your savings.
Set up transfers that occur automatically each payday. If you don’t see it, you won’t spend it!

2. Use the 50/30/20 rule.
ASIC’s guideline is simple and effective:

50% needs
30% wants
20% saving or investing

3. Make wealth‑building “lazy-proof.”
Remove friction. Keep the process boring and consistent.

The Bottom Line

You don’t need a high income or a head start to build wealth. You need time, consistency, and a plan that matches your goals. Your starting point is far less important than what you choose to do next.

At CommonCents Financial Planning we excel at facilitating comfortable productive conversations through clear and genuine illustrations of why doing it is so important and the potential risks of not doing it.

The post The Wealth‑Building Myth Holding Too Many Australians Back appeared first on CommonCents Financial Planning.

How to Have Early Insurance Conversations with YOUR Adult Children

Nick Girle — Mon, 12 Jan 2026 05:30:05 +0000

At CommonCents Financial Planning we believe in beginning life insurance discussions with adult children well before any crisis emerges.

Early action establishes responsible financial habits in your adult kids, reduces risks for them and for you and can help prevent significantly greater difficulties later.

Many parents hesitate having this talk for fear the topic feels too morbid yet once initiated these conversations typically bring relief and clarity to everyone involved.

Highlighting Practical Realities Gently

When we ask young adults what’s their primary option for safety in the event they get sick or injured and their response is a very quick and simple ‘I’ll move back in with mum and dad’!

You can utilise this insight to assist in reframing the discussion of insurance to be an enabling, authentic path to self-sufficiency rather than relying on the dependence of mum and dad.

A bit of help in paying premiums during the establishment phase provides essential breathing room whilst good practices develop simultaneously protecting retirement plans from becoming default safety nets.

Helpful yeah?

Try Using Relatable Examples

Of course, real situations resonate the most deeply and if you don’t have any stories from your own family and friend group then please reach out to us as we have seen dozens of situations where some good conversations around insurance could have gone a long way.

Consider the case where the daughter in law of one of our clients passed away unexpectedly which left the husband facing enormous pressure on where they were to live and how they were going to get by. The end result was the son and grandchildren moved in with the grandparents which emotively was an easy decision to live with but financially it became a very real source of tension.

We’ve assisted other clients who have covered extensive grandchildren costs so that there is no breakdown in relationship with the surviving spouse and access can be maintained with the grandkids.

Also, in situations where there is a prolonged illness helps to demonstrate how income protection payments preserves finances and relationships and prevents households from requiring grandparent accommodation during vulnerable periods.

Structuring for Growing Responsibility

When discussing insurance with your adult kids make sure that the cover is in their name or in their super and that the cover is not in your (the parent) name.

If they need help with premiums then you can either pay for the premiums directly or reimburse them with the same amount. My preference is that you pay the premiums directly yourself as that way you know the cover is in place and that the premiums are genuinely paid.

As financial independence and responsibility grows in your adult kids then transfer the premium responsibility to them.

Early proactive discussions of finance including life insurance help to cultivate lifelong responsible approaches to financial behaviours and decisions.

You can introduce topics naturally during gatherings or alongside milestones like a property purchase or family expansion.

The post How to Have Early Insurance Conversations with YOUR Adult Children appeared first on CommonCents Financial Planning.

Life Insurance is a gift that is as Smart as it is a Self-Protective Gift

Nick Girle — Thu, 18 Dec 2025 06:39:30 +0000

At CommonCents Financial Planning we’re passionate about gifts that provide genuine long-term value rather than momentary pleasure.

Contributing to your adult children’s life insurance premiums stands out as one of the most impactful options available. Though it may lack traditional wrapping this gift prevents devastating financial consequences from affecting your retirement while building robust protection for the next generation.

Many parents grapple with balancing support and independence yet this strategy often achieves both beautifully.

Removing the Default Safety Net Burden

When adult children contemplate prolonged inability to earn income their honest backup plan frequently centres on returning home regardless of current age or circumstances.

Covering premiums ranging $1,000 to $2,000 annually eliminates this unspoken expectation from your retirement equation.

Rather than facing potential disruption to travel plans or erosion of savings through supporting another household, you establish professional protection that allows everyone to maintain independence even during challenging periods.

Real Stories That Illustrate the Difference

Remember that when talking with your adult kids about the need for insurance, it’s those personal experiences that can bring abstract concepts to life far more effectively than statistics.

One client watched their son endure years without work following severe health complications. The income protection policy initially funded by the parent, delivered essential monthly payments preserving mortgage commitments and household functionality throughout the crisis.

Another situation involved grandparents who after tragically losing their child funded extensive private education costs, clothing and daily expenses primarily to sustain close relationships. A step wrong here could have meant the loss of contact with grandchildren.

You can use stories like these to ask your adult children about what arrangments they’ve made to protect themselves financially against death or a long term disability. You’ve probably heard similar stories from friends and colleagues which you can use to raise the topic.

The Selfish Benefit That Helps Everyone

Most parents acknowledge privately that despite encouraging self-reliance, they would always revert to assitance during a genuine crisis.

Paying premiums channels this natural instinct toward structured professional protection rather than unplanned direct support.

Many choose initial coverage then transition payment responsibility once children recognise the value or link ongoing payments to milestones creating positive associations with security planning.

This kind of gift cultivates resilience and responsibility rather than reliance.

Consider beginning with affordable options potentially structured outside super for optimal tax treatment then gradually shifting full responsibility.

Considering funding insurance costs in a time when everything is fine is an easy decision financially but a difficult decision emotionally. In a time of crisis the decision to step in with assistance becomes an easy decision emotionally but can be a financially destructive one.

The choice is yours how much weight you put decisions in a time of calm or crisis.

We can help, contact us whenever ready to transform thoughtful intentions into comprehensive lasting protection across generations.

The post Life Insurance is a gift that is as Smart as it is a Self-Protective Gift appeared first on CommonCents Financial Planning.

Why Parents Should Consider Paying for Adult Children’s Life Insurance

Nick Girle — Thu, 18 Dec 2025 01:27:36 +0000

We often explore practical ways to protect the people you care about most.

Paying for your adult children’s life, trauma, and income protection insurance can seem counterintuitive—after all, they’re independent now. Yet we see real value in it, especially to avoid unintended burdens later.

Here are three compelling reasons to consider covering those premiums.

1. It protects your retirement as much as their future

You may be surprised to hear that many adult children – even in their 30s or 40s – list “move back with Mum and Dad” as their backup plan if illness or injury strikes.

We’ve seen retirees delay travel, dip into savings or return to work to support grandchildren after tragedy affecting adult children. Covering $800–$1,500 yearly in premiums removes that unspoken expectation.

It isn’t enabling dependence—it’s safeguarding your hard-earned lifestyle while giving them genuine security.

2. Premiums are lowest when young and healthy

Personal insurance rates rise sharply with age and health changes.

For those that are on the younger side of 40, locking in comprehensive cover while younger can save thousands of dollars over the long-term.

The son of one of our long term client’s faced three years without income after severe food poisoning complications – the income protection policy (initially parent-funded) replaced most earnings which contributed greatly to preserving the young household and relationship.

Without it, the fallback likely would have been severe pressure on the relationship, addition of parents’ financial support and maybe even an adult child moving back home.

3. It preserves choices and relationships during grief

When a young parent passes away unexpectedly, surviving spouses face tough decisions: can I keep the family home, can I maintain schooling, can I keep up enough hours at work?

We’ve helped parents who stepped in heavily – funding private education and daily costs – to stay involved with grandchildren.

Proper life insurance gives the surviving parent options, reduces reliance and potential tension over money while keeping relationships strong.

Insurance isn’t about expecting the worst – it’s about preparing so the worst doesn’t overwhelm everyone.

Start the conversation early, get them to review their default super insurance (default cover is good start but is rarely personalised), and consider covering the premiums yourself until they develop some good money habits.

At CommonCents Financial Planning, we run affordable quotes and tailor protection that benefits all generations.

Reach out—we’re here to guide you towards greater clarity and peace of mind with your money.

The post Why Parents Should Consider Paying for Adult Children’s Life Insurance appeared first on CommonCents Financial Planning.

Halt Tech Support and Remote Access Scammers in their tracks

Nick Girle — Fri, 05 Dec 2025 06:32:14 +0000

Two years ago, an elderly client of ours clicked on a link that purported to update the security software on her computer. Within minutes a scammer had called her and pressured her to transfer money from an online savings account to one of her own transaction accounts.

Over the next hour the scammer bombarded her with high pressure language and demands to act quickly to save her money. They had her drive to the local branch all whilst they remained on the phone demanding her to hurry. They demanded she withdraw $9,000 in cash and then return home where a courier was waiting to collect a package. The courier was unrelated to the crime and had responded to an online order to collect the package and deliver to another location.

Police had nothing to work with and the advice was to get a new computer, such was the speed and sleekness of the scam.

Tech support scams are one of the fastest-growing threats we see – someone rings claiming to be from Telstra, Microsoft, or NBN saying your computer has a virus and they need remote access “right now.”

Here are some ways you can be safer.

1. Legitimate companies almost never cold-call about computer problems

Telstra, Microsoft, and Apple do NOT ring unsolicited to tell you your computer is infected.

If you get such a call, hang up immediately.

We’ve had clients who let the caller remote in—within minutes malware is installed, banking details stolen, and sometimes ransomware locks everything.

2. Never grant remote access to an unsolicited caller

Even if they sound convincing and show you “proof” of errors, it’s fake.

Once they’re in, they can install keyloggers that record every password you type.

We had one client who caught it halfway and yanked the power cord. That’s the only thing that saved them.

The safest response is purely to say, “I’ll call you back on an official number” and then don’t.

3. Keep software updated and use proper antivirus

Enable automatic updates on your computer and phone, most patches fix security holes that scammers commonly exploit.

We also recommend installing reputable antivirus with real-time protection and regular scans.

Another great security option is to set your internet banking apps to require device approval for large transfers. This then adds an extra barrier even if someone gets temporary access.

Tech support scams rely on urgency and fear.

Slow down, hang up, and verify.

Assume the worst of every caller and rely on the defence that you will call them back on an official number.

It’s much better to do a quick check than get a total clean-out.

The post Halt Tech Support and Remote Access Scammers in their tracks appeared first on CommonCents Financial Planning.