Will you have to work harder and for longer because of coronavirus?
Money expert Vanessa Stoykov explains how COVID-19 has affected some Australian's finances for the worst – and shares her top tips on what to do about it.
While I have been talking to people for many years about their money, I really wondered what COVID-19 had done to Australians – and if people truly understood the long term financial ramifications of the pandemic.
To find out, I commissioned an independent research company The Digital Edge to conduct a survey of over 1,000 Australians across a range of ages, locations, and socio-economic backgrounds.
The study revealed more than a third of all Australians think they will need to work for longer, with 23% of people saying they would need to work a few extra years, and 10% saying they would need to work 5-10 years longer.
Looking at the data by ages really brought home how devastating these figures are for people's lives. Among those negatively affected, 54% were between 18-34 years old, 43% of were aged 35-54, and 23% were 55-74. That's almost a quarter of all workers getting ready to retire.
I have spoken with older people who are now contemplating going back to work in their 70s – and then there are many who have health issues that prevent them from doing so - which is not only devastating but in turn creates more reliance on government safety nets.
On the other hand, a small percentage of people have found ways to overcome these challenges by finding new jobs or other ways to supplement their income.
While there are less of these positive stories right now, they do remind me of the amazing resilience and potential we all have. I see these qualities a lot through my work and still find them so inspiring. Becoming more entrepreneurial is a huge advantage to people recovering financially from the pandemic.
So, even though this is a challenging time for many, there are some fast ways you can catch up and make up for the losses of COVID-19. It's all about making sure you are working smarter, not harder.
If you lost income during COVID-19, and ended up using your savings, you might feel like you are right back at the start. Or, if you took money out of your super to pay for now, you know you have some work to do to catch up in the future.
Whatever situation you are in, there is always a way to catch up and get ahead – it just takes knowing what your financial situation is right now, and then making a plan to improve it over time. These last two words ("over time") are very important, as it is only over time you can change your financial picture for the better – unfortunately there is no quick fix.
There are, however, a few solid rules you can follow that will really help. They include:
1. Focus on your savings
A boring word but one that will allow you to sleep at night. You need to know what your life costs to run per month, and then set up a savings account to cover 6-months worth of expenses. You can start by aiming for 3 months worth of savings, then build it up to 6 months.
This may take a long time – but without it you can never survive the hard surprises like COVID-19. If something like this happens again, we may not have the same level of government support, so having your own safety net gives you more security.
2. Look at your superannuation
Did you take some super out during the pandemic? If so, it's a good idea to start to replenish it. Even adding 1-2% more per year will help you regain ground (and you wouldn't really notice the difference in your bank account at this rate). If you are in your 20s and 30s, closer to 4% will see you get back to normal levels.
Another tip: if you haven't already, download your super fund's app. It allows you to watch your balance, and add to it yourself when you have the money.
3. Hustle and try some side hustles
The only way to really accelerate your financial position is to earn more (and of course, spend less). We have been hearing about side hustle for years, and the opportunities they offer. Now, it's about assessing both your main hustle (your job), as well as a side hustle. Ask yourself: are you earning what you could be at your job? How could you make more?
The next step is to be industrious about what you do with the extra money you earn. Can you invest it? Check out apps like Raiz and Stake, where you can buy ETF funds or direct shares to invest for your future.
While we all have to think differently after COVID-19, we don't necessarily have to work physically harder. What all need to work is work smarter. Then, over time, you can make up ground – and even get ahead.
Disclaimer: The views and opinions expressed in this article (which may be subject to change without notice) are solely those of the author and do not necessarily reflect those of Finder and its employees. The information contained in this article is not intended to be and does not constitute financial advice, investment advice, trading advice or any other advice or recommendation of any sort. Neither the author nor Finder have taken into account your personal circumstances. You should seek professional advice before making any further decisions based on this information.
Image credit: Getty Images, supplied (Vanessa Stoykov)