Before Tuesday, check your cash-flow buffer

Aug 9
2 min read

BV Finance graphic encouraging Australian households to check their cash-flow buffer before the RBA decision

The ABS Selected Living Cost Indexes show how price changes affect different household groups. In the June quarter 2026, living costs for employee households rose 1.5%, the largest increase among the five household groups. Mortgage interest charges rose 8.2% and were a major contributor as earlier cash-rate increases passed through.

Those figures are useful context, but they are not your household's exact increase. The next RBA monetary-policy decision is scheduled for Tuesday, 11 August 2026 at 2:30 pm AEST. Before trying to forecast it, update the numbers that already control your household decisions.

Why the index cannot replace your budget

A Living Cost Index uses expenditure patterns for a broad household group. Your mortgage balance, rent, childcare, insurance, transport and food mix may be very different from the group average. Multiplying your own budget by 1.5% would therefore create a rough assumption, not a personal calculation.

Worked example: the buffer fell by $270

Worked household budget example showing a cash-flow buffer falling from 900 dollars to 630 dollars per month

Assume a household budgeted $5,200 a month for essential expenses, but its latest three-month average is $5,470. With take-home income of $6,100, the monthly cash-flow buffer falls from $900 to $630—a $270 gap.

This example is illustrative and independent of the ABS index. It is also not a lender serviceability result or a borrowing limit. Its purpose is to show why current statements can matter more to a household decision than an old budget.

Build a three-month cash-flow baseline

BV Finance cash-flow reset checklist covering actual expenses, recurring costs, loan repayments and household buffer

1. Collect the evidence — review at least three months of bank, card and loan statements rather than relying on memory.

2. Normalise irregular costs — convert quarterly, annual and seasonal bills into a monthly allowance.

3. Separate the categories — distinguish essential living costs, debt repayments and discretionary spending.

4. Recalculate the buffer — subtract the updated monthly total from take-home income and decide what margin you need for rate or expense changes.

Four terms to use correctly

Living Cost Index — an ABS measure of price changes affecting a specified household group; it is not a personal budget tracker.

Mortgage Interest Charges — the interest cost included in the employee-household index, affected by loan balances and interest-rate changes.

Recurring Expenses — regular commitments such as utilities, insurance, subscriptions and loan repayments that should be included in the baseline.

Cash-flow Buffer — the amount left after current income is reduced by current expenses and repayments.

If the next repayment may be tight

Do not wait for a missed payment. Moneysmart recommends contacting your lender's hardship team early if you are struggling with mortgage repayments. Available options depend on the lender's assessment and can have longer-term consequences, so ask what changes, costs and credit-reporting effects may apply before agreeing.

Bottom line

Tuesday's decision will be news; your usable number is the cash-flow buffer calculated from today's income, actual expenses and current repayments. Update that baseline first, then test any rate scenario against a household budget that reflects reality.

Sources

Australian Bureau of Statistics — Selected Living Cost Indexes, Australia

Reserve Bank of Australia — Coming Up

Moneysmart — How to do a budget

Moneysmart — Problems paying your mortgage

General information only. This is not financial advice. Loan options and eligibility depend on your personal income, liabilities, assets and lender assessment criteria.