Money and Life
(Financial Planning Association of Australia)
The COVID-19 pandemic is a global crisis and people the world over are experiencing impacts in their lives as a result. To keep your anxieties about money to a minimum, find out where you can turn for help to secure your finances and income.
With the ongoing escalation of the COVID-19 crisis many people are struggling. Huge changes are happening and we’re all being affected, socially, emotionally and financially. If your ability to work and earn an income has already been affected, you’re likely to be worried about how you’re going to cover your bills and mortgage and pay for the essentials your family need.
Take care of the present first
Depending on your life stage, you may also have slightly longer term – but still important –financial concerns on your mind. If you’re close to retirement, you may be anxiously watching how your superannuation balance has been affected by volatile financial markets. If you’ve saved a deposit and have been house hunting, perhaps you’re wondering if now is the right time to buy.
According to CERTIFIED FINANCIAL PLANNER® professional Corey, keeping your head and focussing on what you can do to make a difference to your finances now, is the best way to keep those goals within reach. “Now is a good time to be reprioritising,” says Corey. “Your long-term goals and strategies can only be built on strong financial foundations. If you can maintain a strict budget and really rein in your cash flow for the duration of this extraordinary period of uncertainty, then you’ll be preserving that stability you need to make methodical progress towards your goals when we all come out the other side of this crisis.”
Cut back on all spending
While Corey has always encouraged clients to keep a tight grip on their cash flow, this has become even more important for the thousands of people who will be feeling more stressed than ever about money. “It’s always been the case that our sense of financial security is correlated to how your cash flow is going and how much cash you’re holding,” says Corey. “So to feel calmer you need to really go on the offensive with your cash flow. Review your budget and strip out as many non-essentials as you possibly can.
“While I normally encourage clients to have direct debits set up to pay bills, now is the time to cancel them and speak to every provider about pausing or reducing payments. Look at deferring your mortgage repayments for three months or asking your landlord to take rent payments out of your bond. Talk to your credit card, mobile phone and utilities providers and see what you can negotiate. These steps can help you hold onto any cash you have saved for longer. Not only does this give you a greater sense of security, it can turn those savings into enough to last you for months instead of weeks.”
Where to get help
Whether you’re facing an immediate shortage of money or are worried about covering expenses in the weeks and months to come, your bank or financial institution is just one of the places you can turn for help. Economic stimulus packages from federal and state governments have already been announced. The type of help they’re providing for people and businesses in financial distress is changing all the time to keep up with the economic situation.
Here are some of the most relevant, reliable sources of information on financial support available during the COVID-19 pandemic:
Australian Government Treasury: Economic Response to the Coronavirus
https://treasury.gov.au/coronavirus – Details of support the Federal Government is providing to households and businesses to address the significant economic consequences of the Coronavirus.
Australian Taxation Office COVID-19 Information
https://www.ato.gov.au/Individuals/Dealing-with-disasters/In-detail/Specific-disasters/COVID-19/ – the ATO has introduced a number of measures to support business owners with managing their tax payments.
Australian Government Services COVID-19 Information
https://www.servicesaustralia.gov.au/individuals/subjects/affected-coronavirus-covid-19 – information from Medicare and Centrelink for people experiencing financial issues.
Support available across the states and territories
https://www.business.gov.au/Risk-management/Emergency-management/Coronavirus-information-and-support-for-business/Coronavirus-state-and-territory-assistance-and-events – Find the latest coronavirus information, grants and support in your state or territory.
Where to turn for advice
When you’re stressed about money, it’s natural to want to seek advice. “I’ve been flat out talking to so many clients who are dealing with a failing business or have lost their job,” says Corey. “They’re feeling beyond anxious about their finances. As well as offering them advice on the practical steps they need to take, I’ve been really drawing on my relationship with them to give their morale a boost and help them see things in a different way. It’s key to remind them of those personal qualities that have made them successful in life so far and that they can draw on these to stay strong at this most difficult of times in life.”
In seeking advice from others, Corey suggests staying objective and doing your homework before taking action. “Money has traditionally been a taboo topic but under these circumstances people are going to be talking about it more so the ideas and advice will be flowing,”he says. “Advice can be helpful but should be taken with a healthy level of caution. People’s progress with money is more defined by what they get wrong than what they get right. You might not find out for five or 10 years just how much the wrong advice is going to cost you.”
“There is no other time when professional advice is more valuable than it is now. So if you have a financial planner, talk to them. Ask them whether now is the right time to go ahead with that property you’re buying or how to manage your retirement plan if your investments have taken a hit. And if you don’t have that professional support, make sure you’re doing lots of research and thinking things through.”
Take back control where you can
In this context of short and long-term financial uncertainty, it’s now even more important to feel confident in the choices you’re making about money. Getting advice and taking action on your finances can help you experience less stress as things keep changing from day to day. When so many other things seem to be spiralling out of control, you can make a difference to your state of mind by being realistic about what you can change, and what you can’t.
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