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While the economy is still recovering and unemployment looks set to rise, the best thing you can do for your financial wellbeing right now, is have a plan in place, just in case.
By Julie Nipperess
Ok, I hate to state the obvious, but the Australian economy is going to take some time to recover from the coronavirus crisis. How long? Well, it’s impossible to say. There are certainly some positive signs of recovery, but with the virus still active and life far from being back to any sense of normality, (some borders are still closed, masks are mandatory in Melbourne, many businesses remain very cautious about the future) … it could be some months yet.
As I keep saying, I’m a glass half-full kind of woman. An optimist. And I am not buying into a lot of the ‘doom and gloom’ in the mainstream media headlines at the moment.
But, that said, we are currently in an unemployment crisis, caused by the coronavirus pandemic, and the truth is, the job sector could take awhile to bounce back. It could also potentially get worse before it gets better.
So it’s important to know how to manage your money at this time. Particularly is you’ve lost your job, or if your income has been reduced.
The first, most important step in this 4-step process is ‘Don’t Panic!’. The good news right now is that the Federal Government is providing a lot of financial assistance to people who have been affected by Covid-19. So, research your options. Find out what welfare you can access and sign up. Tap into your rainy day fund if you have one (this is exactly what you created it for) and most importantly, keep your options open, keep looking for work, even if it means putting your career on hold.
This really is about taking a long, hard, and very honest look at the balance sheet, and creating a budget that’s going to work with your own individual situation.
While the Job Seeker and Job Keeper payments might keep some money coming in, chances are they won’t cover all your bills. So it is time to seriously consider your priority spending.
Priority spending is the roof over your head, the lights and the hot water, and food. These are the bare necessities. Then add in petrol or transport and other necessities. As a third step, really carefully consider ‘wants’ or ‘nice-to-haves’ versus ‘needs’ and plan your money accordingly.
Quite simply, you need to trim your spending so that it more closely matches the money you have coming in, otherwise you could run the risk of ending up in a debt spiral.
Most of the electricity suppliers, telcos, local councils, landlords and banks are being exceptionally understanding and even quite generous at the moment. So, pick up the phone and make the call. You may be able to get a rental deduction or a mortgage ‘deferral’ or a payment plan for your electricity and telephone.
Just be aware that you will need to pay back whatever concession you receive right now.
For example, if you defer your mortgage or your local council rates, then the money owing will be built-into your future repayments… But if cash is tight right now, it’s an option you can take without being penalised because getting a bad credit rating as a result of not paying your bills can affect your chances of borrowing money down the track.
Of course, for some people right now it might be difficult to imagine a future where things are different, but make no mistake – nothing lasts forever, and you want to make sure that you stay on track.
This pandemic, the recession, your momentary unemployment or income loss will eventually change. So, keep a clear head and put in place strategies that will serve you well now, and in the years to come when this is all but a distant memory.
You have to remember that these are unprecedented times and you are not alone. Everyone – in fact most of the world – is being affected by Covid-19 one way or another.
If it helps to take the stress out of your finances, get professional help. There are a lot of resources on our website, and the Step Up Financial team is more than happy to talk you through some sensible money options.
Financial stress is one of the most significant contributors to depression and anxiety, so if you feel like you’re not coping, get professional help for your mental health too.
This is general advice and should not be treated as personal advice.
Julie Nipperess is an authorised representative of Step Up Financial Group Pty Ltd ASFL No: 512509.