Author: Leigh Jobling, Partner, TAG Financial Services
In these challenging times, the COVID-19 pandemic will have a significant financial impact on most of us over the coming months. There are many things that we can’t control but we can take a serious look at our spending habits. Below are some tips on reducing your spending that you can implement now.
Review your expenditure
Review discretionary expenditure
To identify discretionary expenditure sit down and list all the things you spend money on and pay for. If you pay most of your bills on credit card review the last 6 months of statements and make some decisions. Ensure you are never spending more than you earn. Visit the government MoneySmart website has some great tips on budgeting.
Review and eliminate all “lazy” expenditure
Look at all subscriptions and memberships that are being direct debited from your account. Ask yourself if you are using them or if you really need them.
Shop around your car, house and contents or private health insurance – you may be surprised how much you can save. Personal life insurances or income protection insurance can often be purchased via superannuation. Speak with your super fund to see if you can obtain this in super instead of paying the premiums yourself. Speak to the experts in our Investment Advisory & Wealth team for some feedback on this if you need to, as all insurances are not the same.
Work with your bank
The 4 major banks have announced measures to assist customers
If you have a mortgage, some banks may let you move to interest only payments for a while. Others may entertain a repayment holiday for a number of months. Check with your bank directly and see how you qualify (many have a dedicated COVID-19 process you can follow). Many banks are also offering super low rates on 2-3 year fixed loans which may help if there’s an opportunity for you to re-finance some or all of your loan. Our TAG Finance & Loan team can assist with re-financing.
Review Credit Cards.
Save high interest costs on credit cards by considering using your redraw capacity on your home loan to pay off credit cards. Then reduce your credit limits or chop up your cards – don’t spend money you don’t have. If you have an issue with credit card debt then watch our Credit-cards-friend-or-foe webinar for more tips.
Avoid pay later schemes
Avoid temptation of using buy now pay later schemes to purchase goods at shops or on-line. The cost of not meeting the 4 regular payments is extreme and again you are spending money you don’t have and therefore may not be able to repay.
Protect your cash flow
Speak to your landlord
If you rent, speak with your landlord about reducing the rent temporarily. Most property investors would rather retain a great tenant than not earn any income at all on their investment property.
Increase Frequency of Payments
Contact service providers that issue large annual or quarterly invoices (council rates, insurance companies, energy providers, etc) and see if you can move to monthly payments. Beware of any fees or extra costs.
Know what help you can access
Government payments, benefits and concessions
The government has announced various benefits in response to the COVID-19 pandemic, for example, Jobseeker payments will be doubled for those who are now out of work. A good summary can be found at: https://moneysmart.gov.au/covid-19-financial-assistance
Speak to your family about the situation and what measures you want to put in place and why. You will need to pull together to help and support each other at this time.
If you have any questions, please contact us on 03 9886 0800 or via email.
Disclaimer: The information contained is general in nature. Professional advice should be sought before acting on any aspect on this page. Financial planning services provided by TAG Financial Advisors Pty Ltd (ABN 77 154 205 017 AFSL 415632), a wholly owned subsidiary of TAG Financial Services Pty Ltd (ABN 67 075 374 686).