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The coronavirus pandemic is plunging many Australians into financial stress. If you're struggling at the moment or are just looking for ways to prepare yourself financially, this guide will show you how to review your spending, handle your debt, get hardship support and find savings with cheaper financial products.
Comparing and switching to cheaper credit cards, home loans, utilities and insurance products can save you some serious cash. Everyone's situation is different, of course, but here's an example using products and figures from Finder's database.*
Product | Current payment | Cheaper option | Savings |
---|---|---|---|
Home loan | Current interest rate: 3.59% Loan amount: $500,000 Monthly repayment = $2,270 | Current interest rate: 2.59% Loan amount: $500,000 Monthly repayment = $1,999 | $271 |
Home insurance | Current monthly premium: $195 | New monthly premium: $89 | $106 |
Car insurance | Current monthly cost: $109.64 (comprehensive) | New monthly cost: $32.36 (comprehensive) | $77.28 |
Phone | New smartphone contract plan: $95.74 | Cheapest prepaid SIM only plan: $28.40 (keep your old phone) | $67.34 |
Energy | Most expensive plan: $413 per quarter | Cheapest plan: $294 per quarter | $39 |
Broadband | Unlimited high-speed NBN plan: $69.99 per month | Unlimited lower speed NBN plan: $49.90 per month | $20.09 |
Digital subscriptions | Netflix (standard): $13.99 Disney+: $8.99 Spotify (premium): $11.99 | Netflix (basic): $9.99 Cancel Disney+: $0 Spotify (free): $0 | $24.98 |
Regular expenses | Gym membership: $40 Food delivery: $200 | Suspend gym membership: $0 Groceries (cook at home): $100 | $140 |
Total monthly savings | $745.69 |
Reviewing your expenses and spending is always wise, but especially now that coronavirus has totally changed our lifestyles and spending habits.
Make sure you do the following:
If you need an easy way to monitor your spending and get insights in your finances then download Finder's free app. The app tracks your spending and can notify you of better deals on cards, home loans and more,
If you're managing to save money, make sure you put some away to access in an emergency. This is more important than ever during the coronavirus pandemic. And if you already have an emergency fund saved up, check on it to make sure you have enough cash there.
Ask yourself how long you could cover your food, rent and living expenses if you lost your job, fell sick or were unable to work. The ideal is to have a few months' worth of salary saved up, but if you've lost your job or don't have savings you may want to look at ways to boost your income.
Find more helpful money savings tips
If you're fortunate enough to have an emergency fund and some extra cash, then you should think about where to put it. Interest rates on savings accounts aren't great at the moment, but you could lock some of the cash away in a term deposit and generate a bit of extra interest.
However, if you have a home loan or any big debts, then you might be better off starting there.
If you get hit with financial stress because of the coronavirus, then your existing debts will only make it harder to stay in control.
Extra money you've managed to save by cutting back can go towards paying off your debts. Just be sure to prioritise urgent, high-interest debt over lower interest debt.
A credit card debt at 20% interest is probably a bigger worry than a home loan with a 3.00% rate. So if you can put a bit of extra money towards a debt, focus there first. A HECS-HELP debt is indexed for inflation so it will rise over time but doesn't come with interest charges and is therefore less urgent than a personal loan debt.
If you have multiple debts, consider your debt consolidation options. If your credit card debts are out of control, then putting them all on a balance transfer credit card (and then paying it off during the interest-free period) might be the way to go.
Your guide to debt consolidation
If you have a home loan, check your interest rate right now. Then start comparing some of the market's most competitive offers and see what you're missing out on.
Even a small difference to your mortgage interest rate could save $100 a month or more in repayments and that really adds up over the life of the loan.
You can compare a range of competitive rates on this page and learn how to refinance your mortgage.
Also, if you have made extra repayments on your home loan you might want to think about what to do with them. If you're relying on accessing that money in an emergency via mortgage redraw you might find it hard to do. Some lenders have recently started trimming down the amount of money available via redraw, especially for borrowers struggling to make repayments. Pulling your extra repayments into a mortgage offset account will give you the savings benefit of extra repayments/redraw but you'll have total control over the money.
If you're renting, on the other hand, there is some support available if you're struggling to make repayments. If you've suffered a loss of income and can't make the rent then you should try to negotiate some kind of reduced rent, if possible.
Your phone, Internet and streaming service fees definitely add up. Shopping around for better deals on each will help you pocket more cash.
Sticking with the same insurer and automatically renewing your policy year after year is an expensive mistake. Take a look at other similar home and car insurance policies on the market and see if you can find comparable coverage at a lower cost.
Also, be sure to check that you're properly insured for your current circumstances. If your living situation has changed because of the pandemic, then why pay for insurance that you don't need?
Get more insurance saving tips
While it is a tough time to be an investor, with stock markets flailing and businesses shutting down, savvy investors can take advantage of any situation. If you have investments, you should definitely review them and decide how best to use this money now.
This will look different for every investor, but you should consider the following:
Always do your own research and consider speaking to a financial adviser before making big decisions about your investments.
Sometimes, no amount of money saving tips can get you out of financial trouble. Times are tough and many workers are vulnerable when businesses shut down. Banks, lenders and other financial providers have hardship assistance schemes and may be able to help you negotiate reduced repayments or a temporary deferral.
How to get financial help during coronavirus
Some of us are more vulnerable to the coronavirus, both medically and financially, than others. This includes immunocompromised people, healthcare and other frontline workers and people working in precarious jobs.
Here are some steps you can take to protect yourself:
If you are short on income, then a second job or "side hustle" may be the best way to keep money flowing in.
Here are some ideas to get you started:
Find more creative ways to generate income on our side hustle guide.
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