Information provided by the Federal Government suggests there's evidence that COVID-19 can spread from person-to-person. Measures taken to try and slow the rate of infection are going to cause significant disruption and uncertainty for some time. Once the worst has passed, everyone will be keener than ever to get things rolling along again. For now, we have to bunker down and do what we can to weather this storm and minimise the risks.
Locking down your financial future
These uncertain times can bring stomach-churning worry about our financial future. However, there are plenty of things we can still control, so let’s focus on those.
Here are some things you can do to better manage your financial wellbeing:
Know where you stand financially
- Review (or create) your budget and see where you can cut costs. Strip everything back to the basics and take stock of what you own and what you owe. It will assist you to make appropriate financial decisions if you know where you currently stand financially.
- Contact your credit providers if you foresee financial difficulties ahead. Most financial institutions offer payment options to people in financial hardship. Don’t delay contacting them though.
- Forget about your super (for now): The most important thing to remember about your super is that it’s a long-term investment - don’t panic. Historically, after every crash there’s an upswing: we’ve seen that with previous pandemics, such as SARS. If you haven’t yet retired, you may be better to leave your super alone, in a low fee fund, with investments that suit your investor profile and investment time-frame. Instead, use the current situation as an opportunity to trim your costs. Tasplan’s Chief Investment Officer, David Stuart, has written an article to explain how COVID-19 has impacted the financial markets and the impact that may have on Tasplan members’ investments.
- Check your insurance cover within your super: if you have insurance through your super, check to see if you can continue your cover outside paid employment if this becomes necessary.
- Low interest rates: With the interest rates at historic lows, now may be an opportune time to get ahead with your home loan repayments, if you can. Alternatively you could consider topping up your offset account, to give you the flexibility to re-draw funds in case of emergency. If you had already built a buffer in your offset account, you may be able to withdraw some of this buffer to provide short-term access to low-interest funds if required. Speak to your lender or financial adviser to check if these options may be suitable for you.
- The Federal Government has announced an assistance package for businesses that need financial support to get them through this crisis. If you’re a business owner, check the government website for businesses at business.gov.au for details on eligibility.
- The government has also introduced a $750 one-off economic support payment for individuals. To see if you’re eligible check the Centrelink website.
- The government has also announced a JobKeeper Payment for employers, employees and sole traders. To find out more visit business.gov.au.
Avoiding financial anxiety
We’ve been through some things you can do; let’s look at some things NOT to do.
- CHOICE health insurance expert, Uta Mihm, says: ’Don’t buy or change your private health insurance policy because you're worried about COVID-19. It won’t affect the quality of your treatment." If you do need hospitalisation, you’ll most likely be treated in a public hospital anyway. This is a sentiment backed by the Department of Health.
Credit cards/Buy now, pay later
- Don’t pay high penalty interest on your credit card: check your balance and pay it off on time.
- Avoid the temptation of using after-pay or zip money. No one knows for how long this uncertainty will continue, so it’s best to be conservative with your spending. Don’t get out of your depth with expenses you may not be able to pay back later.
- With kids staying home from school learning online and parents working from home, make sure you avoid bill shock by monitoring the amount of data being consumed in your household. It might be the time to review your internet service and shop around for more data at a cheaper price.
In the short-term at least, most of us are going to spend a lot more time at home than we’re used to. Stay calm and focus on the things you can do and we’ll make it through these uncharted waters, together.