Coronavirus Financial Implications

The coronavirus pandemic has thrown Australia, particularly Melbourne, into a frenzy.

A recent report from Members Equity Bank (ME Bank), has found that even though this has clearly been a harrowing period for many, in reality, ‘Australians’ financial comfort reached a near-record high despite the pandemic’.

At first glance this sounds positive, but after delving deeper into the report, there are a few clear points that resonated with the conversations myself and the team have been having with our clients (who are primarily Victorian). These include:

• The fear of a weak future labour market has lead to decreased spending
• There is greater uncertainty of what the future looks like for many
• Government stimulus has helped boost the financial resilience of Australian households (for now)
• For the first time since 2014, more households are spending less than they earned
• Only 32% of families believe they could last longer than 3 months based on their current spending savings
• 39% of part time workers are looking for increased hours – a 30% increase on six months ago
• 34% of households believe they will be worse off due to the pandemic, compared to 20% of households who believe they will be better off

So, now that we have seen those stats, there are some steps you can take to help minimise the COVID impact.

Get a detailed understanding of your financial situation

• Assets and debts
• Your cash flow – both incoming and outgoing
• Review all your direct debits and cull the ones that don’t bring you joy!

Start planning

Set aside a clear buffer that is only for a rainy day. Three months of expenses is a good starting point, and if you don’t have this safety net, it’s never too late to start putting some away each pay cycle until you get there.

• Be aware of what you are eligible for if things deteriorate with your employment or financial circumstances – some examples are mortgage holidays and government stimulus
• Start some goal planning – having some positive things to work towards is important.

In the interim, I would love to hear from you with an answer to these two questions:

• What will be the long-term financial benefits of this pandemic for you?
• What is your biggest financial learning been from the last six months?

Let me know your thoughts at matt@ctrt.com.au