Tips to stay afloat following a loss of income
Written and accurate as at: Jun 12, 2020 Current Stats & Facts
Since precautionary measures were heightened to slow the spread of COVID-19, almost 1 million Australians have lost their jobs. According to the Australian Bureau of Statistics, Australia lost 7.5 percent of its jobs between 14 March 2020 and 18 April 2020. If you are one of the many Australians who has lost their job or whose income has fallen, it is understandable that you may be feeling anxious about your finances.
Here are some important tips to help manage your finances through this difficult period:
Take advantage of government assistance
The Federal Government has announced a range of support packages available to people who have lost their source of income or have had their income significantly reduced.
These include the JobKeeper payment, a wage subsidy program, a new coronavirus supplement, household stimulus payments, and support for retirees.
We previously published an article summarising these key measures. Comprehensive details of the measures are also available on the Treasury website.
Prioritise your budget
Reviewing your expenses and spending is a prudent strategy in any financial plan and is likely to become even more important should a loss of income occur.
With any reduction in income, it is wise to put the spotlight on your fixed and discretionary expenses. Look to put together a budget that includes your essential expenses such as your mortgage payments, bills, and groceries. This is also a good time to assess which non-essential expenses you can reduce or do without until your income rises again. It might be helpful to organise discretionary expenses into two lists: 1) things you don’t need and are happy to live without and 2) things you don’t need and you would really like to keep.
Prioritising your expenses not only creates a plan for you to pay your bills in a rational way, but it also offers you a step-by-step process to ensure both your short-and long-term financial stability and success.
Speak to your bank, insurance and energy providers
Certain providers are offering relief options for customers during this difficult time.
- Banks - some banks are offering relief options to home loan customers. This could come in the form of fee waivers, mortgage deferrals, interest rate freezes and payment reductions. Certain credit card providers have lowered rates, as well as offering additional relief by reducing or pausing minimum repayments and refunding late fees on credit cards. You can find a list of bank hardship teams on the Australian Banking Association website.
- Insurers - some of Australia's insurers are currently offering financial hardship support to customers when they are in need. This includes options for health insurance, life insurance, car insurance and home insurance. The type of support varies but could include freezing premiums, temporarily suspending cover or providing discounts on premiums.
- Energy providers – The Federal Government has produced a guide to help households manage their energy costs through this uncertain time.
Look after yourself and guard your mental health
Being tired, worried or stressed can lead to poor decision-making when it comes to dealing with your finances. Try to set a daily routine for yourself, stay connected to loved ones via video conference or phone calls and ensure you are getting adequate sleep each night. Keep your body and mind fit and healthy through regular exercise, meditation and other modes of self-care. There are a variety of apps and online resources available to assist, including this government website.
Don’t lose sight of the future
As hard as it is, try your best to keep the pandemic and your current financial situation in perspective. Plan for your life on the other side of the pandemic – this will serve as a reminder that there is life outside of and beyond the current situation. Revisit your financial plan with your financial planner. A financial plan includes contingency strategies for unforeseen events (such as the one we are experiencing now) but most importantly, it serves as a blueprint to assist you in achieving your long-term goals.
If you would like to discuss anything mentioned in the above article, and its relevance to your financial situation, goals and objectives, please do not hesitate to contact us.