Melissa and Ben Harvey

Your Financial Survival Guide to COVID-19

If someone would have said to me that in the first quarter of 2020 Australia would have been hit by firstly bushfires, then floods then a worldwide Pandemic I would have had a hard time believing them. But here’s the thing about hard times, you don’t quite believe it will happen to you until it does.  So whether you’re reading this article and looking for guidance on how to handle household finances in these uncertain times, struggling with loss of work due to Covid-19 or perhaps have been forced to self-isolate then hopefully these tips will help! I am by no means a financial expert, just a regular Mum who has made some preparations which have meant that going through this time is a little less stressful and I’m feeling a little more on top of things than I would have felt say 2 years ago if this had happened then. So let’s dig in and work our way through the list.

TIPS FOR THE NECESSITIES

 By this I mean the roof over your head, the food in your belly, clothes on your back and the lights are on at home. A lot of people out there are feeling in survival mode but by following these steps you’ll be hopefully feeling more at ease knowing you are covered. In time of need, these essentials are the most important factors to consider so I’m going to break it down one by one.

  1. Food –  The sustenance that gives us not only energy and helps keep us full but helps protect our immunity during this important time. Good, fresh food is a must! But with this Pandemic, there have been a few challenges including supply chain issues and panic buying resulting in shortage of essentials. I am not a hoarder and I don’t feel that I panic buy, but I am a meal planner and if you aren’t already, I suggest you give it a try! Meal planning helps you to make the most of the food items you have in your pantry or fridge and therefore lower costs and wastage, but also assists you if you find yourself with a random cut of meat due to shortages. It also can help you save money by buying larger quantities and therefore receiving better value for money. Aside from this, I shop for my meal plan based on 4 weeks worth of meals (aside from fresh produce) so that if I am required to self-isolate at any time for the required 14 day period I will be covered for most things(plus potentially a week either side). This is practical in a time where there are shortages and I may need to visit 2-3 Supermarkets to obtain all of the items needed. I freeze or store whatever I can for longevity. I use the recipes requiring the most perishable ingredients first and do a small top up shop (or send the hubby to get it) in weeks 2, 3 or 4 as needed. I shop fresh produce with what is in season as this is the most economical.
  • Housing – Do you have a mortgage and are struggling to make repayments? As of this week the Big Banks have started to announce relief for those affected by the Covid-19 Pandemic and a waiver of payments for a designated time frame. If you are struggling to make ends meet, this is a great time to get in touch with your bank and see what assistance you may be eligible for. If you are currently renting, please watch this space! There has been a lot of pressure from State Real Estate Institutes as well as Opposition Leaders to introduce a Rent Freeze (no increase to rents this year), Eviction Moratorium (disallowing evictions due to overdue rental payments as a result of Covid-19), as well as further funds for crisis housing. While all of these elements will be a most welcome relief, right now if you have lost income due to Covid-19 I encourage you to contact your Income Protection Insurance company if applicable or Centrelink to see if you are eligible for any sort of Rental assistance.
  • Electricity –  Electricity has a reputation for being extremely expensive in Australia, and whilst the government promised reductions this year we are already seeing some states receiving benefit in the form of a price freeze on increases, an ‘Energy Assistance Payment’ for Social Security Holders that will be doubled to $600 which will reduce their bill. It is also heartening to see the US and UK Electricity giants offering a delay for bill payments. Now that we are in a time where we are required to spend more time at home, looking at how you can reduce energy costs becomes more important than ever. Turning switches off when not in use like the toaster or the kettle, turning off lights, reducing cooling and heating requirements by taking other measures and using more energy efficient appliances all add up. If you are finding you are struggling with these costs, talk to your energy provider about firstly ensuring you are on the best plan and ask for a reduction. Yes – ask!!!! Tell them you are having financial issues and see if they can agree on a payment plan which may assist with payments. If you feel you are being overcharged you can always use a comparison site to see if you can find another supplier at a better rate, or lastly if you are really struggling and receiving disconnection warnings then you can always visit your local community centre to see if you are eligible for an EPA Voucher which should help reduce the owed amount.
  • Clothing – The Retail Industry is struggling right now as less people visit shopping centres and practice Social Distancing. You have probably already noticed there are an increase in emails and offers from online and traditional retailers that you are receiving and while these sales are very tempting and we want the economy to be stimulated and hopefully avoid recession, I would encourage you to think practically and anticipate what you or your family may need over the next six months. At the end of this month, those receiving Stimulus payments of $750 will start receiving these funds into their accounts which will be very welcome. There are ways that you can receive more bang for your buck and save in this area. You can stock up on discounted clothing on the off-season, you can use fantastic apps like Shopback which will give you cash back on purchases, you can sign up to newsletters and loyalty clubs to receive further discounts, you can participate in loyalty programs such as Flybuys or Woolworths Everyday Rewards, you can shop around to find the best price and see which retailers price match, you could also shop discount retailers or support charity stores, and if you are looking to spend your Stimulus money elsewhere you could always try breathing new life into your clothes by repairing them, have a clothes swapping party with your friends, and declutter to downsize and sell off any excess clothing on Ebay or Gumtree!

EMERGENCY FUNDS

Picture this, for a lot of people it won’t be too hard to imagine at all. You’re in the middle of a financial storm, you can feed and clothe the kids but the debt collectors are calling and your hours have reduced at work due to COVID-19. Then suddenly the washing machine breaks, you have a car accident or you need urgent dental work. Imagine if you had funds set aside to deal with said emergency. It would still be a nuisance, but it wouldn’t be devastating as you could handle it. This is why having an emergency fund is crucial to getting ahead because let’s face it, life happens! Many financial educators recommend an amount of $2000 to be suitable for your Emergency Fund as this is large enough to pretty much cover most short-term emergencies (I’ll cover off bigger emergencies shortly). Prioritize saving for this, sell off any unwanted items around the home, if possible during this time then do any overtime possible. It may seem hard at first but start small if needed and save first before you pay others. Having these funds tucked away for that inevitable emergency will give you peace of mind!

PRIORITIZE YOUR DEBT

Once you have the essentials covered and your emergency fund is in place, the next stop for preparing to survive during the financial repercussions of COVID-19 is to prioritize your debt. We have already discussed Mortgages above in the Necessities so let’s discuss Consumer Debt as this can be crippling if in the event you have job loss or reduction of income. Money Management Experts such as Dave Ramsey and Scott Pape recommend tackling your debt by concentrating on paying the one with the lowest total owed first while maintaining your minimum repayment on others. The theory behind this method (often referred to the Snowball method) is that by paying the lowest amount off first it increases confidence and increased cashflow to then turn your attention to your next debt and so on until all debts are paid off. Having personally used this method myself, I can absolutely say that it was an essential factor to our family becoming debt free. Read about our journey HERE. It works! No, it’s not easy. Yes, it’s hard work. But imagine the disposable income your family will have available to you once the job is done.  Even if you don’t finish paying off your debts and we come out of the other side of this pandemic, imagine the years of debt you have shaved off and how much interest you have saved yourself! It is absolutely worth it. If, however you find that you have fallen on desperate times and are experiencing true financial hardship then talk to your lender. This will help you work out a strategy, protect your credit rating and they may be able to assist you with a grace period for payments. Ask for an interest rate reduction. Communication is key here. If you have multiple debts this may be a good time to talk to your lender about Consolidation to free up household cashflow. Just ensure that you use that extra cashflow wisely with a debt repayment plan. If you have a business or are self employed and you have business debt, talk to your provider as relief has been offered as part of the COVID-19 National Stimulus package. You may also be eligible for assistance with covering wages for staff and equipment purchase deductibles so please contact the ATO for further information.

THE BIG STUFF

Here is where I put my big girl panties on and talk about the important stuff. Again, I would like to stress that I am by no means a Financial Expert but in uncertain times I am passionate about making sure my family is covered and I am sure you wish to be too, hence why you are reading this article. This is where I am going to ask you to put the kettle on, pull out your paperwork and review the following documents:

  1. Income Protection Insurance  – do you have any? Are you covered by Insurance if in the event you are unable to work due to contracting COVID-19? NobleOak Spokespersons have commented that if you are unable to work due to contracting COVID-19 that up to 75% of your income before tax may be payable if you are unable to work for a period of 30-90 days before the claim is paid and this will be dependable on the waiting period you selected when you purchased the insurance so please check your policy and read your Product Disclosure Statements.

“Clients who are absent from work due to self-isolation or due to office closure following request or guidance from their employer, but who have not received medical advice to refrain from work, will not be classified as being disabled. They will not be able to claim on their income protection insurance.” So in other words, if your office or workplace has been closed or you have been forced to self-isolate but you are not personally affected then you may need to use Annual Leave if your employer will not allow you to work from home. You may be able to receive financial assistance from your Bank or Centrelink in this instance.

  • Life Insurance – Again it’s time to review your policy and even log on to your Insurance Companies’ website for any COVID-19 announcements. Specifically, check if there is a Pandemic Exclusion. If it doesn’t have one, and if you had the policy before contracting Covid-19 and in the sad event that you pass away then your family should be covered to make a claim.

In a statement from MLC, a Representative advised ‘There are no specific exclusions for COVID-19 in any of our policies that would affect the way we assess claims.’

If you don’t currently hold a policy, you should be covered as long as you don’t contract Covid-19 if you take out a new policy beforehand.  Please note that standard conditions will still apply, particularly if you have a pre-existing conditions but you may also find that there are increased questions in your new policy regarding previous travel or your intention to travel.

  • Do you have a Will? Do you have Enduring Guardianship and/or Power of Attorney set up? It’s important to have these discussions with loved ones so that they know your wishes in the unfortunate event that you pass away or become incapacitated and unable to make decisions – not to frighten anyone or cause panic as that is not my intention here but to help those who are left behind. Hire a professional such as a Lawyer or Solicitor. This is absolutely worth the cash to ensure your affairs are in order. This is such an important topic in normal times, but with COVID-19 and the increased subject of Mortality it highlights the importance of making sure this is covered. For example, right now the advisement of Social Distancing and the limit of numbers in pubic spaces means that your wishes for a funeral may be impacted so its good to have a ‘Plan B’ sorted.
  • Health Insurance – Private Health Insurance has many advantages for people including Tax Concessions and of course for treating a variety of ailments, however COVID-19 is not one of them due to the Nationwide health response being led by the Public Health System. All testing and treatment, including isolation in private rooms is provided by Medicare and free. Public Hospitals and GP’s can perform test for free for COVID-19 for people who they determine need to get tested. There is also a new Telephone Health Service with consultations with GP’s and Nurses including Allied Mental Health Workers for those in self-isolation, the elderly, those immune compromised or with chronic illness, pregnant women and parents with newborns as well as members of the Aboriginal Community aged over 50.  You will also see pop-up clinics across Australia increasing . Check out the Government Fact Sheet HERE. Further health information can be found here:

THE LITTLE STUFF

OK, I’m just going to say it – if you find yourself in a financial storm and you’re spending money that doesn’t relate to the items mentioned above then I want you to take a serious look at it to determine how necessary it is. The little stuff really adds up! Internet access to keep up with work or even school whilst at home in self-isolation – yes. Gym or Sports Club Membership that you are likely not attending right now – probably not. Take a look at your bank statements over the last few months to get a handle on where you are spending your hard-earned cash. Eliminate what you can, and if it’s a necessity like your mobile phone or Internet then see what you can negotiate for a better rate or even switch providers if needed. Check out comparison sites such as Finder to see what the competition are offering.

WHERE CAN YOU FIND EXTRA CASH

If you suddenly find yourself out of work or with less work there are some great ways you can bring in some extra funds or value to your family. Check out my article HERE which are ideas you can get started on right away!

A WORD ON INVESTMENTS

This is an issue I see multiple times a day as people worry about minimizing investment loss. If you have your cash in an online savings account or term deposit you will no doubt be feeling the pinch right now as the cash interest rate is at an all time low. If you have cash investments but also have consumer debt where the interest rates you are paying are MUCH higher and putting a drain on your disposable income, the logical course of action is to use those funds to reduce your debts immediately. If you are currenty holding on to Shares either independently or through Superannuation and are more than 5 years off your Retirement age, I strongly advise you to do nothing. Turn off the news. Don’t touch your Shares if they are available to you. The market will bounce back eventually, it always does. If you sell your shares now all you are doing is guaranteeing yourself a huge loss. Economists predict this is the correction that the market needed and was due, but this too shall pass. For those who have completed all of the above steps and are in a position to invest then I have heard of multiple people looking to invest for the very first time so that they purchase shares while they are ‘cheap’ – but again, I urge you to complete the above steps first and make sure you have your proverbial house in order.  If you do find yourself closer to Retirement age then I would recommend you talk to a professional Advisor regarding your next best move. If your investments are tied up in Property then as per my above advisement on Mortgages and Housing, your Lender may be able to assist you with a Grace period of deferred payments. Another silver lining for those who have completed the above steps and they have a secure income is that interest rates for porperty purchase has never been so low!

Finally, I just wanted to share that mostly it’s important right now to be kind to yourself and each other and practice tolerance and patience. Check on your neighbours, do they need anything? Practice random acts of kindness especially to the elderly, and to those in need. Find other ways to communicate if you can’t visit loved ones – call them, use Skype, Social Media or Email. Self-Isolation whilst necessary does have an impact on our Mental Health so it’s important moreso than ever to keep in touch and check in on people. Ask how they are doing – this does not cost a thing. If you’re not doing ok and you’re feeling anxious, talking with someone really helps! As this is an article related to financial concerns, it’s most important that if you are having financial issues that you seek help if you need it. In these times, there is not the luxury of sticking your head in the sand. Harsh but true! Talk to your Lender or Bank, your Utility Companies, your Service Providers, your Insurance companies, your Landlord, Centrelink and Community Centres.  The Aussie way is usually a sentiment of ‘she’ll be right mate and there’s always someone else worse off than me’ but that doesn’t diminish your need if you are going through tough times or make you any less worthy of help than the next person. Keep faith, and know that with each of these steps that you take you will feel just that little bit better about your personal situation and be that one step closer to the light at the end of the financial tunnel. Take care friends, Melissa xx

*Disclaimer – I am not a Financial Expert and I receive no Insurance endorsements. I may receive an Affiliate Fee for shopping referral programs.

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