5 ways to future-proof your finances for the next 12 months

Two-thirds of working Australians have had their employment affected by the Coronavirus, that’s according to research from Roy Morgan. Back in March there was a lot of uncertainty around how long the situation would last in Australia and how far reaching the effects would be. 

Now after five months of living through a pandemic, we’re all a little bit older and wiser. So let’s take a look at what has happened so far and see whether or not the gift of hindsight could help us future proof our finances.

The impact on employment has been heavy. Roy Morgan’s latest statistics show: 

• 1.8 million Australians were unemployed in July
• 1.5 million were underemployed
• 3.2 million have had work hours reduced
• 1 million have been stood down from their job

5 ways to future proof your finances

With this in mind, we’ve come up with five ways to help you future proof your finances for the months or even years ahead.

1. Seek financial support

If like thousands of others you have either lost your job or had your work hours reduced, then you might be eligible for the JobSeeker payment.

For those who do tick all the eligibility criteria boxes, the payments are available if you:

• were previously, permanently employed and lost your job as a result of Covid-19
• are a sole trader, self-employed, a casual or contract worker who has lost work or had your income reduced as a result of Covid-19
• are caring for someone affected by Covid-19

According to the Australian government website, you can start your claim for JobSeeker up to 13 weeks before you either lose your job, or your work hours are reduced. You’ll just have to know what date your work situation is going to change to start your claim.

2. Rethink your home loan

Prior to the Reserve Bank’s cash rate cuts in March, home loan interest rates were already heading downwards. Now in September, they are the lowest they have ever been. So, if you’ve been thinking about remortgaging, then now might be the time to do it.

If you’ve been paying off your mortgage for the past two, three, five or even ten years, then it only follows that your LVR will probably be lower than it was when you were first granted the loan. Why does this matter? Well, lower LVRs - around 60% or less - can often snag lower interest rates.

An example of this is Homestar’s Star Gold Home Loan, which comes with variable interest rates from as low as 2.29% p.a. (2.32% p.a.*). This loan is only available to refinancers and you will have to have at least a 60% LVR.

Head to Mozo’s compare refinance home loans page, to have a look at more options.

3. Negotiate a better deal on your rent

Or if you’re a renter, then you might want to think about negotiating a better deal for yourself. Of course, if you’re currently tied to a contract, then your landlord or estate agent is less likely to entertain a rent reduction. However, if your lease is coming to an end shortly or you currently don’t have a lease, you might be able to haggle.

To get started, take a look at rent listings in your area. Then check out SQM’s Asking Rent Prices reports to see if the average weekly rent has gone down in your town or suburb. Once you’ve done your research, approach your landlord with a realistic figure. If you go too low, there’s a chance you won’t be taken seriously. Lastly, once you’ve put a figure on the table, be prepared to negotiate. Remember, even if you settle for a little more than your originally proposed number, you’ll still be paying less than you were before.

4. Ask for a discount on your car insurance or switch

According to Roy Morgan’s research, around a quarter of the population were still working from home in July. If that includes you and in fact you haven’t been doing a lot of travelling these days, then you might want to think about either asking for a discount on your car insurance or switching to another provider.

When the first lockdown hit Australia a number of car insurers offered temporary discounts for anyone driving less or affected by Covid-19. This included Youi, Poncho and the Suncorp Group. As the pandemic has gone on some insurers have extended these discounts. If yours hasn’t, it’s definitely worth giving them a call to ask. Or, if your insurer hasn’t offered you money off at all, think about putting your negotiating hat on and asking for one.

Lastly, another way you might be able to save on your car insurance is with a pay as you drive car insurance policy. These are insurance policies that usually come with the same amount of cover as conventional car insurance. The only difference is that they are designed for people who drive their car less throughout the year.

5. Stash your money in a high interest savings account

If financial stability is a big concern for you right now, then you could consider shifting your money into a high interest savings account. 

If you are earning right now, you might think about signing up to a bonus savings account. These accounts usually come with higher interest rates that have to be earned. Requirements can include depositing a certain amount each month or making a certain number of transactions with a linked everyday transaction account.

Or, if you are earning less money right now or recently lost your job, then you might want to go for a no-strings-attached savings account. These accounts often come with slightly lower interest rates, but the good thing is you won’t have to worry about meeting any regular requirements.

Check out the savings accounts on offer below and remember, always read the requirements before you sign up. You don’t want to wind up with a savings account where you can’t actually take advantage of the full interest rate.

*WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.

**Initial monthly repayment figures are estimates only, based on the advertised rate, loan amount and term entered. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.