The keys to staying afloat during (and after) a crisis

With the COVID-19 crisis changing life as we know it daily. It’s hard to feel secure, even more so if you’re one of the many who has suddenly found yourself out of work due to forced closures. How on earth do you stay afloat financially and mentally.

Yes, I’m a financial advisor, not a psychologist, but the years in this business have shown me that mindset is critical. And that we are at our best asset: without health, we have no wealth. First up, remember that this situation is not forever. It too will pass. Here’s what else to do.

Shoring up foundations

Financial security involves more than a bank balance. Your financial foundations revolve around five interrelated areas:

1. Spending an investment plan
2. Emergency fund
3. Insurance
4. Superannuation and
5. Estate planning

Right now, addressing cash management aspects are critical. The reality is we have to spend some money to live. Whether work has dried up significantly, or stopped altogether, you need to look at what can provide income, and how to reduce costs of living to preserve what you have.

Reducing debt

Try to get rid of existing debt while you can. Pay down or consolidate debt as soon as possible, particularly on credit cards, as they incur the highest interest rates. While many banks are leading homeowners impacted by the coronavirus crisis differ mortgage payments repayments for up to six months, providing some breathing space, there’s been no firm directive for landlords that tenants can negotiate and ask for leniency rental assistance is also available through Centrelink.

Track spending

If you ordinarily have little to no money left over after each pay track you’re spending over a month and analyse where the money is going, and where non essential spending cuts can be made. To do this, separate your spending into bills (housing, transportation, food, utilities and insurance) debt payments, entertainment subscriptions, and personal spending. Make use of tools such as the MoneySmart.gov.au budget planner, which enables you to create a budget for your own circumstances.

Fix the leaks

Shut down memberships, and subscriptions to services you don’t use. They may seem small fry, just a few dollars each week, but when you have a lot of them, and you don’t use them for months, they add up.

Insurances are not in the same category as these unused subscriptions. It might be tempting to let them go, but it can be unwise.

Income stimulus

The Australian Government has put in some extraordinary support payments to help those suddenly jobless or work affected due to the coronavirus situation. Put pride aside and accept help if you’re eligible. While some businesses and industries are shut down, others such as healthcare supermarkets logistics and telecommunications are hiring more casuals. Online communities such as AirTasker may be another source of potential income.

Look after you

When we’re hit with a whammy beyond our control it can feel like the end of the world. It isn’t, believe me. This is a time to look after yourself by getting good sleep, eating well and exercising. Take time to breathe deep, to slow down; it’s good for you! Pick up that craft UFO (unfinished object), you’ve hidden in the cupboard, or that book you left on the shelf. Study something new online, whether for fun or to develop your professional skills. And pick up the phone to a friend, every morning and afternoon.

This article was first published in New Idea magazine (download PDF)