If you had asked me when I wrote my last piece for Financy what I would be writing about this quarter, I could never, in a million years, have predicted that it would be about a global pandemic.
We’re dealing with a health crisis that no one in our lifetime has experienced, which is having an impact on global and domestic economies that no one could have forecast. Entire industries – tourism, entertainment and hospitality – have ground to a halt, and with them jobs.
For Australians in these industries, not only are they dealing with difficulties of living in isolation as they look after their health, they no longer have the structure and routine of work, or the critical income it provides. The Federal Government estimates that around 6 million1 workers will receive financial assistance in the coming months, having lost all or part of their income due to coronavirus (COVID-19).
As we’ve seen time and time before, the Australian spirit to support and look after one another shines brightly in a crisis. Government and large corporates have stepped up to help with a range of assistance packages, which, when combined with our relative economic strength and robust financial system, means we’re as well placed as any country to get through the crisis and, I’m sure, ultimately emerge stronger for it.
But in the meantime, those who are displaced from work and many small businesses are confronted with a challenging financial reality. Here are five things we’re recommending to our clients to help them get through:
- Take advantage of government assistance. A range of measures to support both businesses and individuals has been announced, including the JobKeeper payment, a wage subsidy program, a new coronavirus supplement, household stimulus payments, and support for retirees. Assess your options and eligibility based on your needs.
- Understand the impacts of accessing super early. Superannuation is your money and if you need it, you should consider applying for early release. In doing so, consider how much you need and that whatever you do withdraw will impact your retirement savings. Using ASIC’s assumptions on projected returns, AMP’s research indicates that a 40-year-old could expect to receive between $34,000- $73,000 less in retirement at age 67 by withdrawing $20,000 of this money now. If you need it, apply for it, but once you are back on your feet, consider topping up your super to replenish the balance.
- Reduce spending. The first step is to evaluate where your finances stand today. When you need to make immediate changes to your budget, starting with the largest targets can have a big impact and searching around for the best deals can certainly make a difference.
- Manage your debt. It’s worth considering your options – for instance it may be possible to temporarily pause or defer certain payments. If you’re juggling multiple debts, the general rule is to pay off debts in order of interest rate charged, from highest to lowest.
- Utilise information hubs. Take advantage of free online resources that provide useful tips and information to help you make the best possible financial decisions. The government’s Money Smart website is a great resource, or try our dedicated COVID-19 support hub.
1 Prime Minister of Australia (2020): $130 Billion JobKeeper Payment to Keep Australians in a Job
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