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Understanding Costs: Investment, Must-Have, or a Waste

Author: Harry Hoang | CEO of Tailored Accounts

Despite the RBA increasing the cash rate to 1.85% barely a few weeks ago, ANZ predicts that the worse is yet to come, dramatically revising its interest rates forecast and warning Australians to expect four more massive rate hikes before the end of the year. This will take the official cash rate above 3% by Christmas!

It is vital that businesses and families start rationalising their spending NOW before it is too late. This doesn’t mean that you should spend less. Instead, get a better understanding of the costs you encounter and start spending smarter. Are your costs an investment, must-have, or waste?


An investment is any asset that generates income, appreciates, or saves you money in the long run. These could be businesses buying equipment (e.g. a high-performance computer) to improve efficiency or a family installing solar panels to save on energy bills. You should aim to never cut on investments wherever possible.


These are your essentials, your non-negotiable necessities. Think about how a farmer has to pay the water bill for their crops or how families have to buy bread and milk.


These are the unnecessary spending that you should be cutting. Spending of this sort may make you happier in the short run, but it’s rooted in greed and does not contribute much in the long run. This could be businesses buying luxury cars or a family subscribed to 3 different video streaming services.


The difference between these types of costs may seem fairly obvious, but there is merit in reminding ourselves of the value of spending smart. In turbulent times, it is easy to succumb to panic, many of us need this reminder. 

During the first wave of the pandemic, we had a client call us in a panic to say that they couldn’t afford us anymore. We then ask the client one simple question: “Do you think we are a waste?”, which got them to start thinking. 

The costs paid to Tailored Accounts are a must-have in Australia’s high compliance environment. It’s an investment to help businesses improve their financial performance. And most importantly, all clients need a good accountant to help identify waste and improve the return on investment in their spending. 

Cost savings are critical but don’t cut costs for the sake of it. Carefully look at your spending and understand what is a waste, an investment, and a must-have. And start treating these costs accordingly.


Learn more ways to Manage Your Cash Flow & Costs Throughout High Inflation at our free webinar on the 30th of August. Register here.

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Capital Angels/GRIFFIN Accelerator Investment Evening

Tailored Accounts would like to invite you to the Capital Angels/GRIFFIN Accelerator Investment Evening to attend the presentations of five best investment teams selected by GRIFFIN Accelerator. The event is on Thursday, 25 August 2016 from 6:00 PM to 8:30 PM at CBR Innovation Network - Level 5, 1 Moore Street, Canberra, ACT 2601.

Tailored Accounts's Director, Harry Hoang, is the mentor at GRIFFIN Accelerator. Join the event for networking and learning opportunities. Register your interest today HERE


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