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Five tips to survive a decline in income
Since precautionary measures were heightened to slow the spread of COVID-19, almost 1 million Australians have lost their jobs. According to the Australian Bureau of Statistics, Australia lost 7.5 per cent of its jobs between 14 March and 18 April, reducing slightly to around 7.0 per cent by the end of the year. If you're one of the many Australians who has lost their job, it's understandable that you may be feeling stressed about managing your finances.
Put together a new budget
The first thing you need to do if your income has fallen is put together a new budget. With a reduction in your income, you'll likely be looking to reduce your fixed and discretionary expenses. Put together a budget that includes your essential expenses such as your mortgage or rent payments, bills, and groceries. This is also a good time to assess which expenses you can do without until your income rises again.
Set up payment plans
Losing your source of income can be stressful, especially when you have ongoing payments to meet. If you've put together your new budget and you're not sure you'll be able to meet your regular payments, speak to your mortgage lender and other providers about setting up a payment plan. The important thing is that you do this proactively and keep communication open as having these conversations now will put you in a much better place to negotiate.
See what support you may be entitled to
The government has announced a range of support packages available to people who have lost their source of income or have had their income significantly reduced. Check which support you may be eligible to receive and organise all of the details you need to apply. Full details about the Federal Government's measures to support individuals and businesses are available on the Treasury website.
If you've lost your income due to illness or injury and you have income protection insurance, check what claims you are eligible to make and what payments may be available to you.
Identify potential savings
When you put together your new budget, you probably identified expenses you could do without such as gym memberships and other discretionary expenses. To identify further savings, check if you can switch to cheaper providers for your utilities such as electricity, gas and internet and consider winding back your mortgage payments if you have been paying extra.
Seek advice from financial professionals
In stressful times, it can be hard to look beyond the current period of financial stress. However, this is also an opportune time to reset your financial plan for the future. Take this opportunity to speak with your financial professionals, including your mortgage lender or broker, accountant, and a financial adviser to manage your finances now and into the future effectively.
At a stressful time for people, it's important that you don't feel like you need to weather financial challenges alone. Taking the time to see what support may be available through the government's support packages is a good place to start. And to set up a financial plan for the future that also addresses your current financial challenges, make sure you speak to a qualified financial professional for tailored advice.