COVID-19 – Tips for Financial Management of Your Personal Finances

 

9 April 2020

We have all been affected financially in some way by the impact of COVID-19 from business downturn, our superannuation balances falling, or a decrease in wages.
The goal is to be able to hibernate ourselves financially so we can come out of this crisis in the best financial position possible.
The following tips will assist you in managing through these tough times:

  1. Cut costs – we are all saving due to the stay at home guidelines imposed on us – but you should also take the time to review all your items of expenditure to reduce cash burn.
  2. Prepare a household budget – this is the best way to understand costs and identify savings.
  3. Review your current home loan interest rate – ask the bank for a lower rate or look into fixed rates.
  4. Look at refinancing credit cards and combining with home loans to reduce interest costs and monthly repayments.
  5. Seek government assistance packages available.
  6. Maximise your tax refund – with many of us working from home you are able to claim a deduction for expenses relating to that work. However to be able to claim these expenses you must be able to substantiate such expenditure so start keeping records to maximise your claim:
  • A record of the number of hours you are working from home during this period;
  • Details of your light and power costs during the period, in order to determine the best method to claim;
  • If home internet and home phone are being used, details of the costs incurred based on usage;
  • Receipts for stationery costs and computer consumables;
  • Receipts for office equipment, computer equipment (laptop, modem, computer screens) and software (anti-virus) costs;
  • Records of mobile phone business usage, for emails, telephone calls, mobile hotspot, etc.

If you have been stood down or have a reduction in income from your employment you should consider taking the following actions:

  1. Contact the bank and request that they defer home loan repayments – remember this could add a material amount of interest onto your home loan and many months of extra repayments. Some banks are offering to repay some of the interest so ensure you talk to your bank to get the best possible outcome.
  2. Apply for:
    1. JobKeeper Payment  – some employers may be eligible and be prepared to continue to employ you under the JobKeeper scheme – if eligible you will be entitled to a fortnightly payment of $1,500 through your employer.
    2. JobSeeker Payment – the income tests and personal assets tests have been changed to make it easier to qualify for the JobSeeker Payment. You should apply through your MyGov Account. Instructions to assist you in this process can be found here:
      https://www.servicesaustralia.gov.au/individuals/services/centrelink/jobseeker-payment/how-claim. You should first check with your employer if they intend to pay you under the JobKeeper scheme. If they advise you are not eligible then you should apply for the JobSeeker Payment as soon as possible.
  3. Consider accessing superannuation – Eligible taxpayers are able to withdraw $10,000 before the 30th June 2020 and another $10,000 in 2020-21.

For more on the concessions that relate to superannuation we refer you to a more detailed paper that can accessed using the following link https://i2advisory.com.au/resources/covid-19/covid-19-superannuation-changes/

Our advice is if you can cut costs during this period, maximise government benefits and achieve a balanced household budget, this will reduce your need to defer home loan repayments and keep superannuation withdrawals to a minimum.  The more successful you are in achieving this, the better financial position you will be in when our lives return to normal.

Please refer to the fact sheets below for additional detail as to what you are entitled to.
Income support for individuals –
https://treasury.gov.au/sites/default/files/2020-03/Fact_sheet-Income_Support_for_Individuals.pdf

Payments to support households –
https://treasury.gov.au/sites/default/files/2020-03/Fact_sheet-Payments_to_support_households.pdf

Temporary early release of superannuation –
https://treasury.gov.au/sites/default/files/2020-03/Fact_sheet-Early_Access_to_Super_1.pdf

i2 Wealth Advisors

Should you not have a financial advisor that can guide you through these tough times regarding your superannuation or investments we can assist through i2 Wealth. Our fully licenced financial advisors Craig Muchamore and Don Sampson are available for a no obligation discussion regarding your financial options, to provide you with some insight and peace of mind. Should you require formal advice this will be provided under the Financial Services Guidelines which Craig and Don can explain in more detail.

Craig Muchamore – 0400 280 365 or cmuchamore@nulli2wealth.com.au
Don Sampson – 0408 081 758 or dsampson@nulli2wealth.com.au

As we head towards an Easter Break like no other in our lives the most important thing is to enjoy the break as we all spend time in isolation. These times make us reflect on what is important to us, namely our friends and family. Look after yourself and those around you, stay strong and let’s come out the other side of this even stronger.

From all at i2 Advisory Happy Easter and take care