A Griffith University finance expert believes now is the time to act to lessen any blow to a person’s financial position during COVID-19 and into the future.
As Australia heads towards a recession, Griffith Business School lecturer Dr Tracey West said it was imperative people evaluate their financial situation.
“Making sense of your financial circumstances in times of heightened stress is difficult, but it’s important you take action to minimise adverse impacts on your financial position now, or in the future,” she said.
Dr West said while it was ideal to have an emergency fund of three months’ salary, many simply were not able to raise a few thousand dollars in a crisis, let alone after losing their income.
“This situation is exactly what rainy day funds are for,” Dr West said.
“Emergency funds can help pay for an excess on an insurance policy, get you through until government support kicks in, and reduce anxiety about putting food on the table.”
She said without a contingency fund, the next step to staying afloat is to focus on your expenses.
“Budgeting can be tedious but it is important to know exactly what your upcoming expenses are,” Dr West said.
She suggests rounding up all your most recent statements, placing them together and starting a budget, either on a piece of paper or on a program like Microsoft Excel.
The next step would be to list all outgoing expenses — rent or mortgage repayments, rates, water, electricity, mobile phone, home internet, home and car insurances, car registration, school fees, loan repayments, and weekly expenses like groceries, petrol and medication — one under the other, and totaling them.
She suggests listing your income and comparing the two. If needed, prioritise registering for government support and if budgeting is overwhelming enlist the help of someone, such as a free service like Financial Counselling Australia or a not-for-profit like Salvation Army.
“Ask your billers for help to reduce or delay payments or for hardship support or look for a better deal.”
Dr West said it helped to nominate a reward for persevering with your goals as having something to look forward to can assist to curb spending.
“What goal can you set to bring you joy and focus your attention?” she said.
Finally, she suggests reflecting on how you could strengthen your financial position in the future, looking at whether your income is risky, possible forms of supplementary income and if you can start saving as little as a dollar a week when you have recovered.
“Having a regular savings habit is one of the key actions you can take to improve your overall financial wellbeing and build resilience.”
Dr West is holding a self-paced eight week masterclass called Financial Life Skills starting 11 May and 10% of the registration fee will be donated to Logan East Community and Neighbourhoods Association, which provides financial literacy workshops, hardship support, no interest loans and financial counselling services to the local community.