Has COVID affected your cashflow?
Wealth Market has been inundated with new clients who want to set themselves up through the rollercoaster that is a pandemic…did we mention it’s coupled with a recession?
And rightly so. These are, as they keep saying in the media, “novel” times, so families, small businesses and individuals are looking to ensure they’re in a strong place to weather the volatility.
Some of our new clients, sadly, have lost their jobs or had to close their businesses; either by pausing for the short term or shutting up shop permanently. The upshot of all of this downtime is that we’re finding more and more Australians are asking questions about their financial position.
A research company recently asked 1,000 Australians about their financial mindset during COVID. Some respondents indicated they plan to review their savings (34%), others will review their investments (16%), a percentage will look at their insurance policies (16%) and a small number are researching switching banks (11%). Nearly 25% of respondents are eager to pay off their debts, while 40% want to save more and a further 32% wants to get better at budgeting. Notably, 15% want to put more money into longer term investments and 11% are looking to seek financial advice.*
Use COVID to get financially fitter
Here are some suggestions for working on your financial health and mindset during a pandemic:
1. Never waste a crisis: if you’ve been financially disadvantaged by COVID, this is the perfect time to start budgeting, park or suspend payments that are ‘nice to haves’, restructure your current ingoings and outgoings, and tap into talking to your bank about what they can do for you.
2. Consolidate debts: if you’re paying down multiple loans, we can look at prioritising and streamlining those to make payments simpler and potentially cheaper.
3. Negotiate rates: is your personal loan, home loan, car loan or credit card charging you a pre-COVID interest rate? This is not the time to be donating to banks.
4. Emergency cash: advisers like us harp on about insuring your income and having an emergency fund precisely for times like these. It’s never too late to start to build a buffer of three or six months’ worth of expenses like living costs, debts, rent, and mortgage payments. Believe us when we say, there’s room for us to cut non-essential costs from your life, seeking alternative income streams (there are more options than you imaging), and (worst case) we can look at withdrawing superannuation**.
Use this unprecedented time to do some overdue structuring to your financial position.
*The Toluna and Harris Interactive COVID-19 Barometer is a bi-weekly index that provides timely insight into COVID perceptions and community responses. The latest research surveyed over 1,000 respondents in Australia.
**The COVID-19 early access to superannuation The opportunity to withdraw your superannuation exists up to midnight of 24 September 2020. This should be an absolute last resort as it can lead to losing existing insurances held via super and can negatively impact the compounding effects of your retirement nest egg