Managing your finances during the coronavirus outbreak
Here's how you can save up to $700 a month and get your finances under control in the midst of a global crisis.
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.
13 steps to managing your finances during the coronavirus
What's in this guide?
- Take another look at your spending habits
- Build your emergency fund
- Make any extra savings work for you
- Get your debts under control
- Refinance your home loan
- Find better deals on your phone, utilities and digital services
- Review your car and home insurance
- Review your investment portfolio
- Get financial hardship support if you need it
- If you're in a high-risk group, protect yourself
- Find ways to make extra income
Real quick: How to save around $700 a month
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
|Home insurance||Current monthly premium: $195||New monthly premium: $89||$106|
|Car insurance||Current monthly cost: $109.64|
|New monthly cost: $32.36|
|Phone||New smartphone contract plan: $95.74||Cheapest prepaid SIM only plan: $28.40|
(keep your old phone)
|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|
Spotify (premium): $11.99
|Netflix (basic): $9.99|
Cancel Disney+: $0
Spotify (free): $0
|Regular expenses||Gym membership: $40|
Food delivery: $200
|Suspend gym membership: $0|
Groceries (cook at home): $100
|Total monthly savings||$745.69|
Take another look at your spending habits
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:
- Check your spending. Examine how coronavirus has changed your spending habits. You may be spending less now you're stuck at home, but maybe you're ordering food more than ever. Are you spending more on online shopping as a quarantine distraction? Look at your spending and see where you can cut back.
- Do it yourself. Relieve boredom at home and save money by doing things for yourself: make your own coffee, bake a cake and learn how to cook your favourite takeaway dishes.
- Cut back. Cancel any recurring payments for services you're no longer using. There's no point paying your gym membership when you can't go, for example. Check your banking app to see if you have any recurring charges for things you might have forgotten about. If you have multiple streaming subscriptions, consider sticking to one at a time, watching everything on that service and then switching to another.
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,
Build your emergency fund
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.
Make any extra savings work for you
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.
Get your debts under control
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.
Refinance your home loan
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.
Find better deals on your phone, utilities and digital services
Your phone, Internet and streaming service fees definitely add up. Shopping around for better deals on each will help you pocket more cash.
- Utilities. Energy providers often have competitive offers for new customers. Compare energy providers, look at policies that match your usage patterns and find a better deal.
- Streaming. Look at how many streaming services you're paying for. You could be better off paying for one service at a time and then switching over. For example, pay for a month of Netflix, watch as much as you can, then cancel and try a new service for a month. Take advantage of free trial services if you can but be very careful to cancel before the trial ends (some services deliberately make this step difficult).
- Internet. Compare prices from a range of providers. You might be able to get comparable speeds for a cheaper price. Consider your current usage habits (which may be quite different if you're stuck at home all day) and find a plan that suits your needs.
- Phone. Again, compare plans and prices and look at how much data you need and how much you're paying for it. If you're at home all the time and using Wi-Fi, you may actually have less need for mobile data, for example.
Review your car and home insurance
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?
Review your investment portfolio
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:
- Do you need access to cash now? If you think you're better off adding to your savings or emergency fund, then you might decide to sell off your investments.
- Are you prepared to invest more? This is the old buy low, sell high approach. It's a risky choice, but many stocks may have hit rock bottom (unless they fall even further).
- How diverse and recession-proof is your portfolio? The more spread out your investments are, the safer you may be. And you need to look at the industries and businesses you're invested in. Some companies are poised to thrive in this pandemic while others may fall and never rise again.
Always do your own research and consider speaking to a financial adviser before making big decisions about your investments.
Get financial hardship support if you need it
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.
- Home loans. The big banks and smaller lenders have announced coronavirus hardship support or have existing hardship schemes in place. You may be able to pause your repayments for up to six months. This can really help you in a crisis, but you will need to make up the repayments later, possibly with interest.
- Health insurance. If you have private health insurance, your insurer may offer a repayment pause, membership suspension or other help. You can learn more here.
- Credit cards. Your bank likely has a specific hardship policy for cardholders. You can learn more here.
If you're in a high-risk group, protect yourself
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:
- Write (or update) your will. It's grim, but it's important to be prepared for the worst. You may have never written out a will before. And if you have, it may need updating if your circumstances have changed.
- Plan "a living will". This is also called a "care directive", "health direction" or "advanced directive" (every state and territory has a different term). Your living will is a legal means of specifying how you wish to be treated medically if you're incapacitated or unable to make decisions for yourself.
- Consider life insurance. Review your life insurance policy if you have one, and consider other forms of cover if they seem appropriate, such as income protection insurance.
Find ways to make extra income
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:
- Sell stuff you don't need.
- Drive or deliver food.
- Rent out spare space in your home.
- Take on freelance jobs online.
- Turn a hobby into a side business.
Find more creative ways to generate income on our side hustle guide.
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