What is a Hike?

What is a Hike?

You’ve more than likely heard the word “hike” used often; a hike in interest rates, wages, or a hike in inflation. The word “hike” spikes anxiety, concern, or fear for the future. It can give us a strong, negative reaction to a subject we previously didn’t even think about.

But where does it come from? Why do we say “hike”?

At the best estimate, the word directly comes from adjusting your clothing, pulling up your pants, or hiking your stockings. It was only adopted into the vocabulary of the finance world in the early 1900s; one notable instance was the doubling of the price of a soft drink! Regardless, it denoted a sharp, significant, or unexpected increase, similar to today’s use.

So, what is and isn’t a hike?

A hike can refer to an increase of any kind. You’re more likely to hear the word in times of economic turmoil, although it seems to be broadening in use.

It’s likely to instil a negative feeling of concern like you won’t be able to afford your future mortgage or rental payments, or petrol prices will go through the roof. But that isn’t the reality of the situation.

Just because it fits the description of a hike, it isn’t necessarily something that needs to alarm you. If you’re more alarmed by the word that describes the situation than the reality itself, we have a problem.

Then why do we call all increases hikes?

A cynical point of view would say that alarmist language attracts eyes to articles. And while that may be true on some level, it’s more likely that the word has just found a place in our language. When people talk about prices, rates, or benefits increasing, “hike” is a short, snappy word that easily fits.

While “hike” may be a convenient word synonymous with “increase”, to the Mums, Dads, and homeowners around Australia reading an article in the newspaper’s financial section, it may read differently.
It’s not to say that journalists intend to make the reader anxious, but that can be the effect.

What does a “hike” actually mean for you?

For the average Australian, in most cases, a hike does not mean that your financial situation will be drastically changing. The word is used so broadly that it more often indicates a slight, expected increase in an otherwise irrelevant number than a serious change in your financial position.

So, when you see the word hike, all it means is increase, and don’t be alarmed; not all changes are bad.

Take a breath, talk to your financial advisor, and find out what this “hike” really means for your situation. Your financial advisor or mortgage broker will explain the latest increase, why it’s happening, and how it will affect you.