Do you have a financial back up plan?

One of the many negative effects of COVID-19 was its financial impact. Scores of people lost their jobs, while many others had their hours reduced.

As 2020 has proven, there is always the risk that a sudden, life-changing event, could sink our finances. If we pretend otherwise, these hardships may strike like a hammer. But where do we even begin?

Many of us would struggle to quote our regular expenses off the top of our heads. It’s worth figuring out what you’re left with (if anything) after rent, groceries, bills, travel and medical expenses. If your expenses suddenly became higher than your income, what could you reduce or cut out for your cashflow to be back in the black? Sticking to a shopping list, for instance, can help you shop more effectively, as can buying products based on the cost per weight rather than the marked price. Also, pay attention to specials.

And don’t forget to factor in that the cost of living is always rising.

Social security can help keep your head above water, sure, but would relying on welfare put your finances into the red straight away? For starters, most people on the Disability Support Pension cannot afford a privately rented property without being instantly broke on payday or having a flatmate to chip in. This is very unfortunate, as having your own place is one of the most basic freedoms of being an adult.

The saying “putting money away for a rainy day” is about 500 years old. Still, a lot of people either have little to no savings or are in debt. Depositing just $50 a fortnight is all it takes to start moving your finances in the right direction and you can set this to happen automatically. It may be worth discussing interest rates with your bank, but don’t let them upsell you to something beyond your means. Also, once per year people who receive benefits can get a $500 interest-free loan from Centrelink that is repaid from their fortnightly payments, so consider putting this away too.

Having hobbies and interests is great but it’s always best to think through buying expensive luxury items before committing to paying them off for months or even years. For example, if you have not had a work shift since March, this may not be the best time to buy that 100”, $4k television.

In business, it’s all about who you know, so be sure to network with your colleagues. That way, if your job vanishes, through no fault of your own, you’ll know where to start looking for another one ASAP.

Grant J Everett, Panorama magazine