As the nation continues to keep up with the latest COVID-19 updates, rules and regulations, one area under the spotlight is how Aussies will cope financially during the pandemic.
According to recently released figures from the Bankwest Curtin Economic Centre, by November, more than one million Australians are likely to lose their jobs due to the economic blow brought on by the coronavirus, prompting many households to access their emergency savings.
But while it might make sense to drain your emergency fund to stay afloat, we’ve got five questions to ask yourself before you hit the panic button on your finances.
Are there any benefits I can apply to?
If you haven't been keeping up with the news you may have missed the announcements of various stimulus packages that are being provided by the Federal Government to help vulnerable Aussies get through this difficult time.
For instance, if you receive JobSeeker payments or are a sole trader or casual worker earning less than $1,075 a fortnight, you may be eligible for a $550 supplement every fortnight for the next six months.
Or if you receive any Centrelink benefits, like a carers allowance, you are entitled to a one-off $750 stimulus payment. Just keep in mind that this payment won’t be rolled out until July 13 2020.
And if you own a small business, you may be able to access the stimulus package as well. If your small business has a turnover of less than $50 million, you will receive a tax-free cash payment of up to $100,000 to keep your business running and maintain staff. Organisations with less than 20 employees will receive up to $7,000 each quarter for every currently employed apprentice to help pay their wages for up to nine months.
What payments can I pause or freeze?
Within the last week, the big four banks and smaller lenders have come forward and announced that mortgage holders can pause their home loan repayments for up to six months. Other forms of support include decreasing variable rates, allowing access to redraw funds through offset accounts and waiving fees. Get in contact with your bank to see what options are available for you.
Utility payments, such as your energy bill can also be extended or repaid in flexible installments. While you can’t freeze your payments, you can speak to your energy provider about being put on a financial hardship plan that allows you to make your payments on an agreed schedule.
Small businesses are again not exempt from these support packages, as small business owners can speak to their bank about having their business loan or credit card repayments deferred and accessing their term deposits early without facing a penalty.
What spending can I put off?
With gyms, recreational centres and bars being shut down, more Aussies may be finding it harder to keep themselves entertained. And since there’s not much you can’t buy online, it’s not uncommon for Aussies to pass the time with a bit of online shopping. However, if you are in a position where you don’t have a guaranteed income, frivolous spending may not be ideal.
Keep yourself from overspending online by putting purchases on hold for 24 hours. This way you’ll be able to make sure it’s an item you really need. Another way to minimise costs if you are trying to uphold your regular gym routine is to skip purchasing equipment and use items around your house, like filling backpacks with books or heading to Youtube for workout inspiration.
And while it’s almost become the norm to overbuy items to stock up for a potential lockdown, reckless spending like this could see you go over your budget. Keep spending to a minimum by only purchasing items you realistically need.
Will I be able to replenish my savings later on?
If you are considering using money in your savings, this is an important question to ask. According to Mozo research, it takes the average person 9 months to build an emergency stash, and that’s assuming you’re saving 20% of your monthly income.
While it’s unclear as to how long the nation is expected to maintain this lifestyle, only take the amount you need and can afford to put back later on.
Need a better place to store your savings during this time? Head on over to our savings account comparison tool.
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