How to manage on a reduced income during the COVID-19 crisis
Covid-19 is a devastating black swan event that has shaken the whole world. As the Coronavirus continues to spread and remains a global pandemic, so do the lockdowns and social distancing restrictions in almost every country around the globe. Because of this, many people are now experiencing vastly reduced incomes, with the latest figures showing that almost a million Australians are out of work.
We’re all in the midst of a financial crisis the likes of which most of us have never seen before and managing money during this time is a real challenge. Here’s how to keep your head above water during this Covid-19 crisis.
Get help from the Government
The Australian government provides financial support for individuals and businesses who are affected by Coronavirus. Here’s some of what’s on offer;
- Expanded eligibility for income support through an additional fortnightly coronavirus supplement of $550 added to regular income support payments.
- Two $750 Economic Support payments to eligible income support recipients (one already paid in March and a second to be paid in July). These payments do not apply if you are already getting the coronavirus supplement.
- The Jobkeeper program that helps Australian employers retain their staff and keep paying them ($1,500 per fortnight before tax).
- Temporary early release of superannuation and a reduction in the minimum superannuation drawdown rates
- The cash flow boost for business – up to $100,000 paid to eligible businesses who lodge their activity statements over the quarters ended March, June and September 2020.
Reduce your spending
When your income is reduced, it’s important to find ways to reduce your spending. No matter how small the drop in your spending may be, every bit helps in this time of crisis. Here are a few ideas:
- Cut your grocery bills by making a list and planning ahead. Buy home brands, buy only fruit and vegetables in season, and try to use cheaper cuts of meat (now’s a great time to dust off the slow cooker).
- Eliminate non-essentials from your credit cards, such as subscriptions or memberships.
- On the subject of credit cards – make sure you thoroughly check your statement each month to ensure all of the charges are correct and try to pay off the balance each month so you don’t get hit with high interest charges.
- Avoid indulging in those guilty pleasures, such as alcohol or sweet treats you can actually live without. Use this as an opportunity to get your body back into tip-top shape.
Ask for rent or mortgage relief assistance
While your rent or mortgage remains a priority even during the Covid-19 crisis, there are some ways that you can make it easier to manage them.
- Talk to your landlord or real estate agent if you feel that you will be having a hard time paying your rent. Ask for a rent relief by deferring or reducing your payments for a period of time or until your income gets better.
- There are banks that offer financial hardship assistance by deferring mortgages repayments for 6 months to those who are affected by the coronavirus. Find your bank on the list provided by the Australian Banking Association.
Apply for financial hardship relief
Loan and credit card repayments can be challenging and utility bills such as electricity, water, phone, and gas can pile up, making it even harder for you to cope financially on a reduced income. Here are some ways to relieve the stress:
- Talk to your provider directly and explain your situation. Tell them that you would like to apply for a financial hardship so that you can get an extension for the payments or be able to pay your bills on an instalment basis. You can also ask if you’re eligible for a voucher or utility rebate.
- Continue to make minimum payments on your credit cards or loans if you can. Otherwise, contact your bank and apply for a hardship program. It may help you get reduced interest or repayments set for a certain period. Ask for deferral of payments or an instalment plan for your fees that are due for a school, council, or other similar entities.
Stay positive
Times are tough for many people during the Covid-19 crisis, but it’s important to stay positive and remember that eventually things will get better. Many of our elders have experienced testing times in the past, but they survived and so too shall we. The Government is extending a helping hand to people impacted by the coronavirus, and we’re here to help too. If you're struggling with your financial situation and need help to become debt free, make a safe choice and arrange a FREE no-obligation debt assessment today. What have you got to lose - but your debts!