Everything you need to know about Coronavirus and your finances

Olivia Gee

Wednesday 25 March 2020

<p>Couple looking at bills and computer investigating finances during Coronavirus pandemic.</p>

Last Updated: 9.30am, March 30

Around Australia and across the globe, Coronavirus (COVID-19) has permeated every aspect of daily life, from how we work and socialise to how our country will be economically governed for the foreseeable future. The situation is constantly evolving, and Mozo is endeavouring to provide updated information on the virus and how it will affect individuals and businesses. Here are the answers to some of the big Coronavirus questions. 

What is the COVID-19 status in Australia and how might it affect me?

Since the World Health Organisation (WHO) declared the virus a pandemic in March 2020, the federal government has implemented more aggressive isolation methods, ordering non-essential services like bars, clubs, eat-in cafés and restaurants, gyms and retail stores to close, imposing an international travel ban, and placing strict limits on social gatherings in public and at home. WHO has a dedicated web page where you can read the most comprehensive information about COVID-19 symptoms, health outcomes, infection rates and how to avoid contracting the virus. 

Beyond the immediate health concerns, there are many other elements to this global crisis that could impact your day to day life.

  • Economic Instability and unemployment: Mozo research has shown 80% of Australians are concerned about the economy. This is no surprise, as one in five don’t have savings to fall back on, 47% of workers wouldn’t be able to work remotely if their place of business shut down, and 30% wouldn’t have access to paid sick leave. While the economic stimulus package aims to ease this financial burden, providing support to the potential 7.6 million Aussies that’ll be out of pocket is a huge and complex task. Find out if you're eligible for government financial support and how to access it.
  • Scammers: People are stressed and scared. Unfortunately, this unstable climate is a breeding ground for scammers preying on vulnerable people or those trying to assist others. The ACCC is anticipating a rise in scams related to the outbreak, and has thus far received reports about people spruiking fake cures for Coronavirus, investment scams for making money during the outbreak, or online stores selling face masks and sanitary products and not delivering them. 

How can I be financially prepared in the face of this pandemic?

Have you got self-isolation sorted and mastered the art of 20-second hand washing? Now is the time to be proactive about protecting your funds and strap in for the long-haul.

  • Work from home wisely: Many people have the privilege of working from home or remotely as offices and businesses shut down, and if your profession allows you to do so, it’s the best way to help curb the spread of the virus. Monitor how you use your new home office so you can claim a portion of your utility costs, internet bills, tech and furniture depreciation, and other expenses on tax. You might also consider looking into cheap fitness apps so you don’t go mad or atrophy while you’re stuck at home.
  • Use your isolated free time to tick off life admin goals: You might have been putting them off, but we’ve identified seven money-saving items that you should look into while working from home. Take a moment to investigate any scattered superannuation and consolidate your funds, take stock of your energy bills while exploring other providers, and cancel any subscriptions that are no longer bringing you joy. These seven free apps will help you tick off daily finance and life chores.
  • Talk to your bank about emergency relief: As they did in the wake of the summer bushfires, Australian banks and lenders are offering individuals and small-medium enterprises (SMEs) experiencing financial hardship some concessions across impacted savings products, loans and other lines of credit. As instability reins, the latest Reserve Bank of Australia (RBA) interest rate cut saw the cash rate drop to an all-time low of 0.25%. This can be positive for customers with home loans, but can signify lost interest gains for savers. Happily, the big banks are taking the crisis into account: here’s how they’re responding.
  • Look into refinancing: A mortgage is likely the largest loan on the average Aussie’s plate, and ensuring you’ve got the best deal available on the market could save you big bucks. A recent Mozo survey indicated borrowers could save 100k across the life of their loan by refinancing. If you’ve crunched the numbers and are happy with your current provider but still struggling to make payments, consider deferring mortgage repayments while your income is unstable. 
  • Consider your income and life insurance: It’s a tricky time for insurance, with claims related to travel, income and health all impacted by the virus. Life insurance and income protection are front of mind for many, so you’ll need to assess your situation and screen the fine print of your current or prospective policy to see what will and won’t be covered in these new circumstances. 
  • Think carefully about dipping into your savings stash: If your income has been impacted by shutdowns, your first move may be breaking the piggy bank. But before you start funnelling funds from your savings to daily spending account, consider what spending can be put off, if you are eligible for government support, if you can freeze any loan repayments, and if there's hope of rebuilding your savings bundle down the line.

How is this all impacting the Australian economy and society at large?

From the drastic impact Coronavirus has had on the Australian workforce to its role in the March RBA rate cut and the historic emergency cut, there are some life-changing economic moves taking place at the moment. These have flow-on effects to rates for home loans and the interest that can be made on savings accounts.

But beyond interest rate changes, the biggest economic news is around the federal government’s stimulus packages.

  • Stimulus package: The March 23 stimulus package added another $66 billion to the pool of $189 billion allocated to keeping the economy afloat during the crisis. We’ve reported what this will entail across the states and territories, as well as the different support structures for businesses and individuals financially impacted by the crisis.

For businesses: There are a range of measures across the first and second stimulus packages, with a combined $31.9 billion allocated to small businesses. These include cash payments between $20,000 and $100,000 for SMEs, unsecured loan offers of up to $250k, wage assistance to keep trainees and apprentices employed, and instant asset write-offs. The banks are also swooping in with business aid, offering deferrals of loan principal and interest repayments for six months, fee waivers and interest allowances for early withdrawal on term deposits. Find more info on government and bank support packages.

For individuals: While banks and lenders are passing on rate cut benefits and providing some relief for mortgage holders, the government is offering further subsidies for those already on income support and others who have recently become unemployed. Two emergency $750 payments will be available to income support recipients, and the Jobseeker fortnightly payment will be doubled. There are also new measures being put in place to protect rental security. But as more Australians lose their jobs, the role-out of these payments has already hit roadblocks. The MyGov website, which facilitates Centrelink’s digital services, has crashed twice since the most recent stimulus announcement due to a dramatic increase in users. 

  • Some light to the shade: Australia has seen negligent beachside behaviour that ignores social distancing and riotous scenes in supermarkets as panic buying overtakes common decency, but we’ve also redeemed ourselves in many ways. Efforts are being made to support struggling musicians by tuning into live-streamed concerts and buying merch; virtual art gallery and museum tours have been introduced to keep those institutions in the green; local businesses are staying in operation through home delivery of food and alcohol; and other arts and retail companies are benefiting from voucher purchases and donations. We’ve also come up with some ingenious ways to have fun for free while you’re stuck at home.

What’s the go with travelling or planning a trip in the current climate?

If it’s not essential, don’t travel. 

A travel ban for Australians came into effect on March 25, meaning citizens can’t leave the country unless it’s on humanitarian or compassionate grounds, or in the national interest. State borders are similarly being locked down. 

As the global situation has developed in recent weeks, we’ve been talking about locking in travel money card exchange rates and cover for credit card insurance, but booking a trip in the foreseeable future would be ill-advised. There’s no time limit on the travel ban and it’s unlikely that any insurer would cover you when travelling against government advice. In light of this, we’re also seeing airlines like Qantas put restrictions on redeemable Frequent Flyer items as the aviation industry suffers considerably during the pandemic.

If you’re currently outside the country, the leading advice is to return home to Australia as soon as possible where you'll have to adhere to a 14-day isolation period. If you can’t travel home or wish to stay where you are overseas, you should follow the advice of local authorities but bear in mind Australian consular assistance may be limited due movement restrictions.

  • Transferring money internationally: Sending Aussie dollars overseas presents its own risks as the AUD drops amid Coronavirus panic. Happily, there are specialist money transfer providers in Australia offering handy features for getting a better deal on your IMT, like locking in an appealing rate or nominating a preferred rate at which to transfer and holding out until it’s reached. 

Once you’ve digested all the current Coronavirus news, make sure you’re getting the very best in interest returns using our savings account and term deposit comparison tools.

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