Are money troubles keeping you awake at night? Are you struggling to get by or concerned about what might happen in the next few months?
If the answer is yes, you’re certainly not alone. Financial hardship has fallen on many Australians due to the current economic climate. But we know all too well that it can happen anytime for various reasons.
To help ease the worry and get you through these tough times, we’re going to share some of the financial hardship assistance options available to you.
But first, let’s explore what financial hardship actually means.
What Is Financial Hardship?
Financial hardship refers to a position where you’re facing significant financial difficulties and are struggling to cover the bills and basics.
We all know what it’s like to have less money than we’d like. But not having enough money to pay for things like food, electricity, and monthly rent turns the pinch into a punch. And the stress can be overwhelming.
Hardship can result from many things, both in and out of our control, for example:
- Economic downturn (inflation, interest rates, cost of living)
- Job loss/unexpected unemployment
- Serious or ongoing illness or disability
- High levels of debt (e.g. credit cards, unsecured loans)
- Unexpected expenses (e.g. home or car repairs, medical fees)
- Family breakdown (e.g. separation or divorce)
- Poor financial management and budgeting
- Natural disaster (e.g. floods or fires leading to loss of property)
Sometimes, it can be a combination of a few.
Aussies are Doing it Tough
It’s a challenging time for many Australians, with financial struggles becoming increasingly common. The Foodbank Hunger Report 2023 sheds light on this growing issue, revealing that a staggering 79% of households struggling with food insecurity attribute it to the soaring cost of living – a significant jump from 64% in the previous year.
This report also found that:
- The primary causes of food insecurity have shifted. The cost of everyday essentials like groceries (69%), energy (56%), and housing (50%) are now the leading factors, overtaking unexpected bills and long-standing cost of living issues.
- Increased rental costs are affecting more households than rising mortgage repayments, with 34% citing rent as a contributing factor.
- Credit and debt repayments are a concern for 16% of these households, and reliance on services like Buy-Now-Pay-Later for essentials is on the rise.
Digging deeper, findings show that 3.7 million Australian households have experienced severe food insecurity in the 12 months leading up to the release of the report. This ranges from reducing meal sizes to skipping meals entirely, a stark indication of the financial strain many are under.
Meanwhile, a report on financial hardship in the telco sector by the Australian Communications and Media Authority (ACMA) found that 2.4 million people had trouble or concern over their telco bills over the 12-month period.
It’s not a pretty picture and is a scary reality for those living it.
Financial Hardship Assistance
If your money situation feels dire right now, plenty of financial assistance and support exists. And there’s no shame in asking for it.
Here are some of the financial hardship assistance programs you may be able to access to ease the strain:
- Centrelink payments - Access a range of income support payments to meet your basic living expenses, including JobSeeker and Parenting Payments for single parents.
- Rent assistance - Available from Centrelink for eligible individuals and families who rent in the private market and receive certain income support payments.
- State and territory housing assistance - Check what’s available in your local area, from public housing and rent subsidies to emergency housing.
- Utility concessions - Many states and territories offer utility concessions to eligible low-income households to reduce the cost of electricity, gas and water bills.
- No Interest Loan Schemes (NILS) - Offer low or no-interest loans to people on low incomes to purchase household essentials, pay for car repairs and cover other critical expenses. Find a provider
- Food relief programs - Food banks and charitable organisations, such as Anglicare and Vinnies, distribute free or low-cost nutritious food and meals to individuals and families in need.
- Emergency relief - Provided by charities, this may include things like food vouchers, bill assistance and access to essential items.
- Financial counselling - The National Debt Helpline provides free and confidential financial counsellor services, covering things like budgeting, debt management and negotiating with creditors.
- Bank and lender hardship help - Many have programs to help customers in financial difficulties. This may include temporary loan changes, debt consolidation or repayment plans.
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Financial Hardship and Super
A question we hear people asking when they’re struggling financially is: “Can I take money out of my super?”
The short answer is yes, it is possible, but only in very limited circumstances, as follows:
- On compassionate grounds - For example, if you need to pay for medical treatment or palliative care for yourself or a dependant, make home modifications for a disability, pay death, funeral and burial costs or prevent foreclosure for the forced sale of your home,
- When you’re experiencing severe financial hardship - You need to contact your super provider directly to release super funds based on financial hardship. They’ll likely request evidence. Eligibility depends on your age in relation to your preservation age (the age you can access your super if you’re retired).
However, you should only really consider drawing on your super as a last resort. That’s because it can have long-term implications for your retirement savings and may impact your insurance within super.
Financial Hardship and Loans
Another option people also commonly consider is getting a loan.
If you’re in financial hardship, by definition, you’re already in a position where you’re struggling to buy what you need and pay what you owe.
Because of this, taking out a loan to access additional cash is a decision that should be made very carefully. Taking out a loan (or another loan) may only make your situation worse.
Not only will you have additional repayments each week or month, but you can also end up paying a lot of interest. This is especially true if you have a bad credit history and can only access risky second-chance products, such as payday loans.
Here are some things we recommend you do before borrowing:
- Review your situation - Look at your income, expenses, debts and assets, and work to understand the root cause of your financial hardship.
- Create a household budget - Use our handy budgeting calculator. This will help you figure out if you can afford the repayments.
- Explore the types of loans available to you - Are you able to access loans with reasonable interest rates?
- Read the small print - Pay close attention to the interest rates, fees, and terms associated with the loan.
- Seek professional advice - Consult with a financial expert or credit counsellor for tailored advice and to find the best products for your situation.
Take Advantage of Assistance
Financial hardship can fall on anyone at any time. But the current economic climate and rising cost of living have pushed many people to their limits.
If you’re struggling, take advantage of the various financial hardship assistance offered by the government and other organisations. And think carefully before accessing your super or loans to cover the shortfall.
If you’re experiencing financial hardship, get in touch with our team of debt solution specialists today on 1800 534 534 for professional, non-judgmental support, advice and vetted specialist loan products.
