You might be used to facing challengers on the rugby pitch, but now that the season is coming to an end, there is an important financial opponent you may want to focus on in 2025: inflation.
Inflation is a measure of how much the prices of goods and services have increased in the past year. While most of us see rising prices as a bad thing, many consider some level of inflation to be an important part of a well-functioning economy.
You will likely have noticed the effects of inflation in recent years as it reached a 41-year high of 11.1% in October 2022.
Fortunately, inflation has fallen again, and the Office for National Statistics (ONS) reports that it was 2.6% in the 12 months to March 2025.
However, this is still higher than the Bank of England (BoE) target of 2%. Furthermore, even if inflation is at or below the target level, price rises will still likely affect your financial plan.
Read on to learn why inflation could be your biggest opponent in 2025.
The rising cost of living could make it more difficult to build wealth for the future
Your financial plan often starts with a budget. By tracking your income and outgoings, and managing your spending, you can find a balance between short-term spending and saving for the future.
Ultimately, this means you can maintain a good quality of life now, while also working towards your long-term financial aims.
However, inflation means that the costs of essential goods and services such as food, fuel, and energy are going up over time. This could put additional pressure on your budget, especially as rugby contracts are not always created with inflation in mind.
This means that, if you sign a two- or three-year contract and do not renegotiate or move to a new club, your earnings could remain static while prices increase.
Further to this, the BoE operates a policy of controlling inflation by increasing the interest rate it charges to other financial institutions, known as the “base rate”.
This causes lenders to increase their interest rates, leading to higher borrowing costs. It also means savers could benefit from more favourable interest rates. Consequently, consumers may spend less, and so price rises could slow down.
As a result of this policy, many people have seen a sharp increase in their mortgage costs in recent years, and if you have credit cards or personal loans, these could become more expensive too.
All this means your outgoings may have increased considerably and could continue to do so in 2025 and beyond. Consequently, it might be more difficult to contribute to savings and investments for the future.
Inflation may erode the real-terms value of your savings
As well as putting pressure on your budget in the short term, inflation could erode the value of your savings over time.
For example, imagine you put £20,000 in a savings account with an interest rate of 4% a year ago. You would now have £20,800.
Yet, if inflation were at 5%, the same goods and services that cost £20,000 last year would now cost £21,000.
As a result, you can not buy as much as you previously could and inflation has effectively reduced the real-terms value of your savings, even though you have generated some growth.
This effect could be pronounced if inflation reaches high levels, as it has in the past few years. The cumulative effect could also mean that, in decades to come, your savings are worth significantly less than they are now.
For instance, the BoE inflation calculator shows that goods and services that cost £10,000 in 2010 would cost £15,218 in March 2025. This could mean that during an average rugby career of 10 to 15 years, the spending power of your wealth may fall significantly due to inflation.
That is why it is important to generate inflation-beating growth on your savings.
Investing could help you generate more growth and beat inflation
Cash savings can be beneficial as an emergency fund or to pay for short-term financial aims such as a dream holiday or a new car. However, if you want to build wealth for later in life, investing could generate more growth and help you mitigate the effects of inflation.
According to MoneySavingExpert, the best interest rate on a two-year fixed-rate Cash ISA on 25 April 2025 was 4.3%.
In comparison, Curvo reports that the average annualised return from the MSCI World index in the past 10 years was 9.4%.
While past performance does not guarantee future returns, these figures suggest that investing could be more likely to deliver real-terms growth.
We can support you in building an investment portfolio that is suitable for your attitude to risk and financial aims.
You may need to consider the effects of inflation when planning for your retirement from rugby
As discussed earlier, inflation means that the price of goods and services will likely rise over time. It is important to consider this when planning how you will fund your lifestyle when you retire from playing rugby.
As you will no longer have regular earnings from playing, you might rely on your savings to pay your living expenses for a period while you establish a second career. If inflation erodes the real-terms value of your savings, you might not be able to afford as much as you first thought.
You may estimate that your current lifestyle will cost £30,000 a year to maintain, for example. So, a savings pot worth £100,000 would sustain you for around three years while you find new income streams.
Yet, if you are at the start of your career, you may play for another 10 or 15 years before retirement. In this time, inflation could mean that the same lifestyle will cost significantly more than £30,000 a year by the time you come to hang up your boots.
Consequently, your savings may not last as long as you first thought, meaning you must make sacrifices to your lifestyle after your playing career ends.
Fortunately, with our support, you may be able to avoid this situation. Using cashflow planning software, we can help you create an accurate savings goal that considers the effects of inflation.
Get in touch
If you are concerned about how inflation could affect your financial plan in 2025 and beyond, please do get in touch with us at DBL Asset Management.
Email enquiries@dbl-am.com or call 01625 529 499 to speak to us today.
Please note
This article is for general information only and does not constitute advice. The information is aimed at retail clients only.
All information is correct at the time of writing and is subject to change in the future.
The Financial Conduct Authority does not regulate cashflow planning.
The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.
Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.