How to rebuild your life and finances post-COVID
There’s no doubt about it: living through a pandemic has been life-changing for most of us.
We’ve had to face situations we’ve never been in before, dealt with financial pressures we couldn’t escape and experienced city-wide lockdowns (some of us more than others).
The impact of the global pandemic on all Australians, but particularly younger generations, has been far-reaching. Research shows that more that 28% of workers aged 18-24 lost their jobs, while 63% – the majority of people overall who’ve lost their job due to the pandemic – have reported suffering high levels of financial stress.
According to the Choosi Choices Report , a survey of 5,000 Australians who all felt the pandemic had impacted their choices, forcing them to put big decisions on hold (such as travel, social events, moving house or family gatherings). Similarly, the crisis has motivated many Aussies to put their health and wellbeing (76.2%) and family (72.1%) ahead of their career.
Why 2021 is your year to rebuild
As things slowly get back to normal (hopefully these are not “famous last words”), you may be wondering just how to get yourself and your finances on track.
Remember, if getting things back on track seems like an insurmountable and overwhelming task, we get it. Here are some tips and strategies to help you get started. Please note, none of the below constitutes advice, and you should always get assistance from an expert when making financial decisions.
Re-building your super
We know that around 3 million Australians took advantage of the government’s coronavirus super scheme to withdraw up to $20,000 from their super – with around $36 billion being withdrawn from Australian superannuation accounts overall.
If you were one of those people, what should you be doing? The answer is, working on putting that super back as soon as you can afford to do so.
Here’s some ideas on how:
- Funnel some of your pre-tax salary to super: Known as a salary sacrifice or concessional contribution, it’s taxed at 15% (much lower than your marginal tax rate).
- Consolidate your super: Suspect you have multiple super accounts floating around? Log into your MyGov account and consider consolidating all your super accounts into one.
- Make a spouse contribution: If you earn less than $40,000 a year and your spouse makes a contribution into your super, they could be eligible for a tax off-set.
- Get a government top-up: If you’re eligible for the government’s co-contribution super measure, you could get up to $500 added into your super.
Rebuilding your savings
If your savings are looking a little depleted because you had to dip into them during the pandemic to pay bills and stay afloat, take heart. You can build them back up again, even if it takes you a bit of time. Here are some general tips.
- Review your budget: Or create one if you haven’t already got a budget. It can really help you see where your money goes and figure out ways to redirect funds to your savings. A budget app can be invaluable in getting you started, there are many available online which you can research yourself to find the best fit.
- Save before you spend: Send a portion of your salary to a savings account – so you don’t see it and don’t miss it. Your savings will slowly grow in the background instead of being whittled away on purchases you probably don’t need.
- Cut back on expenses: Do you really need four streaming services on your telly? Or all those online subscriptions that add up to hundreds each month? How about your multiple food deliveries to the office? Review what’s essential, cull the rest and send the difference to your savings or emergency fund.
- Consolidate your debts: If you can’t get ahead on your credit card debt, consider consolidating it into a balance transfer with an introductory period of 0% (or a low interest rate). It’ll give you some breathing space and time to pay it down. However this will need some research to ensure it leaves you in a better position.
- Create an emergency fund: Experts suggest having 3-6 months’ worth of expenses in an account you can’t access easily. You can build this slowly or even set up a direct debit to grow it – but it could save you one day when an unexpected cost crops up.
Doing all of the above can only help to leave you in an even stronger position than before, so get started as soon as you can!
Take things one step at a time
While getting back on a financial even keel is something many of us are prioritising, don’t forget to take care of yourself as well. Many experts say young people are suffering great distress over Covid-19, climate change, natural disasters and global political instability – and there are fears for the long-term wellbeing of young Australians.
A national survey by headspace found that 34% of young people are suffering high or very high levels of distress. There has also been a drop in rates of 22-25-year-olds saying they are ‘coping’ or ‘dealing with life’ – it’s down from 54% to 47%.
So, if you’re feeling as if you can do with some extra help and support, talk to your GP or check out some of the health and wellbeing resources at Beyond Blue.
Set yourself up for success
If you still feel a bit shell-shocked from the year that’s been, that’s completely normal. You may be unsure of what choices you want to make going forward, or even which choices are the best ones for your current circumstances.
You might want to seek advice from a financial planner to help put you back on track, establish firm goals and put a plan in place to help you move forward. That might involve looking at the bigger picture of your finances and setting yourself up for the future with a solid budget and the right insurances too. That way, you’ll feel more in control and able to tackle whatever life throws at you.
If you have a family who are reliant on your income, you may also wish to consider the benefits of life insurance. This type of cover is one way you can help to make sure they’re taken care of and can pay bills and even mortgage payments – just in case you happen to pass away.
Need more information on your insurance options? Call us on 1300 363 526.
19 Mar 2021