With widespread job losses and reduced working hours, millions of Australians are feeling the adverse financial effects of the COVID-19 outbreak. As a result, households across the country are reassessing their spending habits to fit in with a new, though hopefully temporary, financial reality.
If your income has already been reduced, or you’re anticipating that coronavirus will impact your finances in the near future, read on for three steps you might want to take.
1. Apply for government assistance
If your hours at work have been reduced or you’ve lost your job altogether, your first port of call should be applying for any government assistance you’re eligible for if you haven’t done so already. Some of the assistance measures already announced include:
$550 Coronavirus Supplement
Available from April 27 for six months, the $550 Coronavirus Supplement will lift the maximum base rate available to income support recipients to $1,115.70 per fortnight. The supplement is available to Australians on the JobSeeker Payment (formerly Newstart), Youth Allowance JobSeeker and Parenting Payment (Partnered and Single), as well as full-time students on Youth Allowance, Austudy, or ABSTUDY among others.
$750 Economic Support Payment
The government will also make two $750 Economic Support Payments to eligible income support recipients. The first $750 payment started rolling out automatically from March 31 to eligible Australians on income support and various concession card holders. The second $750 payment will kick off from July 13, though recipients of the $550 Coronavirus supplement will be ineligible for this second payment.
$1,500 JobKeeper Payment
Businesses deemed to have been significantly affected by COVID-19 may be eligible for JobKeeper Payments to help cover staff wages. That means eligible employees will be able to receive up to $1,500 per fortnight (less tax) under the scheme.
Rent support
If you're a residential tenant and you anticipate difficulties meeting your rental payments, governments across the country have encouraged negotiating a temporary rent reduction or deferral with landlords. However, some state governments have released their own rent support measures, including Queensland and Western Australia which are providing one-off rental grants of up to $2,000.
2. Check in with your bank and other providers
While income support may go some way to easing financial difficulties, if you’re experiencing hardship it’s certainly worth contacting your financial institutions and other providers to see what measures they’ve put in place to support customers.
Naturally, covering mortgage repayments will be of great concern to many households facing a reduced income, which is why banks are offering support in the way of repayment deferrals, rate freezes and fee waivers on home loans.
There are also similar measures in place for customers with personal loans and credit cards, as well as for small business owners.
Insurers and utilities companies (such as internet, mobile and energy providers) are also urging customers doing it tough to contact them in order to make financial hardship arrangements.
Some Australians may also be eligible to access up to $10,000 of their superannuation - once in the 2020/21 financial year and again in the 2021/22 financial year. Before applying, weigh up the benefits and drawbacks of making a withdrawal though, and if you need it, seek advice from a financial adviser or your super fund.
3. Reassess your budget and look for opportunities to save
Once you’ve got a clearer picture of what your reduced income will look like (including any government support), it’s time to rework your budget. Never had a budget? Well this is your chance to make one.
Using a budget calculator is an easy way to get started, but make sure you have your bank account or credit card statements handy because you’ll need to provide a complete picture of your finances.
Not only will creating an updated budget help give you a realistic idea of what you can spend, it’s a great chance to find ways to cut down your existing expenses and save money.
While there are some necessities in life that you won’t be able to avoid paying, you may find that there are non-essential spending areas you can cut back on.
For instance, can you hit pause on any subscriptions or memberships that you aren’t getting the most out of? Try and limit yourself to one streaming service and cancel other unnecessary memberships for the time being.
The same goes for food. Perhaps there’s room to cut down on some of the luxuries you pick up during your weekly grocery shop, or maybe it’s time to bust out the pans and cook more at home rather than spending money on takeaway.
Whatever you do, make your budget and any spending cutbacks realistic. Make the adjustments you need to reflect your reduced income, but also make it a budget you can stick to.
Tom Watson is a personal finance writer and journalist at financial comparison site mozo.com.au.