10 Steps to Protect Your Finances During the Coronavirus Crisis

2020 has been brutal. The deadly pandemic has infected almost 2 million people and killed over 100,000 so far worldwide. In Australia, we are relatively lucky considering our numbers are small in comparison to the rest of the world, but the question is when and how will our economy ever recover?

Many people are scared, jobless,  or have had their business closed and livelihood taken with Government isolation restrictions. Thousands of Australians are sinking further into debt. It’s now more important than ever to adapt and determine the best way to navigate the financial crisis.

We’ve put together 10 steps on how protect your finances during the Coronavirus crisis.

1. Assess Your Finances

The first step is to assess your financial situation and budget. You will  need to determine your incomings and outgoings.  If you have lost your job or are currently applying for unemployment benefits, you may have to access your emergency fund to get you through until Centrelink payments kick in. If you are eligible for Jobkeeper, you will need to contact your employer and ensure that you are offered this to continue working. Because of the all or nothing rule, eligible employees must be offered the opportunity to participate in the scheme.

 2. If You have Savings, Take Advantage of Savings Accounts and Term Deposits

Although the cash rate is at a record low of 0.25%, many banks have high-interest term deposits and savings accounts available for you to keep your money safe during these uncertain times.

Term deposits have taken a beating in recent years, with rates now sitting under the 1.5% mark. However, if you are looking for a relatively risk-free place to store your savings, a term deposit could be for you. Due to the Coronavirus, some banks have special term deposit rates available that are higher than those currently on offer.

Savings accounts are easily accessible and don’t incur fees for early withdrawal of funds.  Most accounts have a higher interest rate than term deposits and some come with added features such as bill payment reminders, spending insights or even alerts when you spend too much on a certain type of purchase or if your account drops below a certain amount – all very useful features during a financial crisis.

3. Consolidate Existing Debts

If you already have existing unsecured debts such as credit cards and personal loans, now is the perfect time to look at consolidating them into your home loan or into a new, low-interest personal loan. Debt consolidation allows you to simplify your finances and in this uncertain time, it’s important to stay financially healthy and eliminate as many debts as fast as you can.

There are many key advantages to consolidating your debts, including:

• One easy-to-manage repayment,
• One set of fees and charges, instead of multiple,
• One potentially lower interest rate, and
• An end date to your new loan term, so you’ll know exactly when you will be debt free.

4.  Review Your Superannuation

Due to the impact that Coronavirus is currently having on the global economy, share markets have dropped and taken a large toll on many Australians’ superannuation balances. If you’re looking to protect your nest egg during these times of uncertainty, it’s time to review your superannuation. The key factors you need to look out for when comparing super funds are:

• Your fund’s investment performance over at least 5 years,
• How much the fund is charging in fees,
• The types of insurance options available,
• What investment options you can choose, and
• Other services, such as offering financial advice.

If you are in severe financial hardship, you may be able to access your superannuation early. Withdrawing from your superannuation does have consequences for your retirement, so it’s important to only withdraw money from your super as a last resort.

5. Save on Your Utility Bills

If you haven’t taken the time to look at your current utility bills lately, you could be surprised at how much you may be able to save by comparing your bills to other offers currently on the market. Review all of your bills including:

• Water,
• Gas,
• Electricity,
• Internet, and
• Phone.

6.  Cancel Subscriptions You Don’t Need

Now that many businesses are closed due to the social distancing restrictions in place to help stop the spread of the virus, you may find you have subscriptions you could cancel to save you money. Look at your bank statements to find any recurring charges, such as streaming services, gym memberships, meal subscription boxes or iCloud storage.

It’s not necessary to cancel them all, but if you’re paying for three different streaming services such as Netflix, Amazon Prime and Stan, keep the one you use the most and cut the others. With no lock-in contracts, it’s easy to swap between these month-to-month depending on your preferences.  

7. Review Insurances

Another great way to save money during the Coronavirus pandemic is to review all of your current insurance policies. This includes car insurance, home and contents, life insurance, health insurance and income protection insurance. Most insurances are large ongoing expenses for households, but by comparing your options, you may be able to save thousands.

If you have multiple insurance policies, another way to save money is to set up a direct debit for payment. Some providers offer a discount if you pay automatically from a bank account.

When it comes time to renew your policy, if you’ve taken out a new policy or if you’ve swapped providers because you’ve found a better deal, always try to pay your premiums up-front for an entire year. Some insurers may charge you less or provide a discount for this.

8.  Refinance Your Home Loan

Refinancing your home loan can be a great way to save during the Coronavirus crisis. Due to the low cash rate, many lenders are currently offering extremely low home loan deals around the 3% mark. With a lower interest rate, you’ll save in fees, reduce the minimum repayment and increase your cash flow. When considering a home loan refinance, you may also benefit from a redraw facility or an offset account.

Be sure to approach your current home loan lender before you refinance. Some fees may apply if you want to break your mortgage before the end of the term.

Banks are lenders are currently offering a 6-month pause on home loan repayments amid the Coronavirus pandemic. If you’ve been impacted financially and are struggling to pay your mortgage, contact your bank or lender immediately for assistance.

9. Consider an Alternative Income Online

If you’ve lost your job or your hours have been cut due to the pandemic, take this time and use it to your advantage to start making an alternative income. You can sell services and certain skills on websites such as Fiverr or Airtasker, or break out the creativity and create some artsy projects you may be able to sell online through Facebook Marketplace, Gumtree or eBay. This could include things like:

• Paintings,
• Murals,
• Pottery,
• Woodworking, and
• Home baking and cooking.

The Coronavirus lockdown is also the perfect opportunity to clean out the house and sell things you don’t use anymore. You can do this online via eBay, Gumtree or Facebook. This may not be enough money to supplement an income, however it may help you put some money aside to pay bills and other necessary expenses.

Coronavirus has caused a spike in demand for many industries, including roles in supermarkets, mining, manufacturing, agriculture and health and aged care. If you have lost your job and are currently hunting for another, take the opportunity to search for a role you wouldn’t normally consider. The Australian Government has launched a new Jobs Hub website to help all Australians looking for work.

 10. Reach Out for Help

If you’re experiencing financial distress due to COVID-19, it’s time to reach out to your banks and lenders for support. Most Australian banks and lenders have financial assistance available for those affected by the crisis, including offering repayment holidays, wavering fees and charges and reducing interest rates. We’ve put together a table below of the assistance available from banks. If your bank is not listed, please contact them directly to find out how they can help. 

*Accurate as at 28 April, 2020.

Revive Financial is Supporting Australians through the Coronavirus pandemic

If you’ve taken all of the above steps and you’re still struggling with debt, we can help. Our friendly team of professionals will take the time to assess your financial situation and tailor a Debt Management Plan (DMP) to suit your needs. This may be in the form of an informal Debtstroyer Agreement, formal Part 9 Debt Agreement or as a last resort, personal Bankruptcy.

Experiencing financial hardship can be hard, but you don’t need to go through it alone. Let us help ease the stress by putting a plan in place to protect your finances moving forward. Get in touch with our qualified team today on 1800 534 534 for a free 30-minute consultation.