For many low-income earners and retirees, the Australian government’s $17.6 billion coronavirus (COVID-19) stimulus package could mean a bit of financial relief to help cover expenses, from groceries to the electricity bill.
More than 6 million Australians who rely on Centrelink benefits will receive a $750 payment under the stimulus package, set to hit their bank accounts from March 31.
The one-off, tax-free payment aims to encourage more households to open up their wallets and support businesses struggling to keep afloat amid coronavirus panic. It comes in light of fears that the pandemic could leave Australia’s economy in dire straits, as consumers pull back on spending and adopt a hoarding mentality.
“Our plan will back Australian households with a stimulus payment to boost growth, bolster domestic confidence and consumption, reduce cash flow pressures for businesses and support new investments to lift productivity,” said Prime Minister, Scott Morrison.
What not to do with your stimulus payment
The question then is how to wisely spend the $750 bonus. As tempting as splurging or comfort spending may be, those extra dollars are a great opportunity for you to whip your finances into better shape.
To get the ball rolling, here are four things to avoid doing, so you can make the most of your stimulus payment:
1. Don’t leave the money be
Although $750 may seem like a hefty amount, if all you do is leave it inside your bank account, you’ll be surprised at how quickly it disappears after a few purchases here and there.
That’s why having a spending strategy in place is super important, like adding the $750 to your budget and mapping out exactly what you’ll do with the money.
If you’re not sure how you’ll spend the bonus just yet, move it into a high interest savings account. With a savings account you can earn interest on your bonus, plus there’s less temptation to ‘dip’ into your funds.
Compare high interest savings accounts - last updated December 01, 2020
- MyState BankMyState Bank
Bonus Saver Account
- Bank of QueenslandBank of Queensland
Fast Track Saver Account
Or if you plan on keeping some of the money in an everyday bank account, make sure you've picked one with no pesky monthly account-keeping fees.
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2. Don’t buy at first sight
From a $4 coffee to a new pair of sneakers, it can be easy to throw money down the drain for the things you love or crave. But spending your stimulus payment recklessly won’t do much to help you out of a financial rut.
That’s why when deciding what to spend the $750 on, separate what you want (e.g. eating out, entertainment) from what you need (e.g. groceries, energy bill) - and channel the extra funds into the latter category.
3. Don’t continue the debt cycle
If you’ve got credit card debt under your belt, paying it off with the help of the stimulus bonus is a good idea. Just be careful that you don’t undo your efforts by whipping out your plastic again the following month, whether to pay your rent or transport fares.
A way around this is to put a portion of the payment towards your emergency fund. That way, you have a safety net in case something goes wrong and won’t have to resort to using your credit card.
4. Don’t gamble it away
It may surprise you that as many as 33% of Australians try to earn back enough money to clear their debt, by gambling or entering the lottery.
But taking your chances at the casino is certainly not the money savvy way to spend your stimulus bonus - for one, there’s no guaranteed rate of return, plus your odds of winning are incredibly low.
If you’re looking for a place to keep your money while also earning guaranteed interest, start your search with our savings accounts comparison page.
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