Five tips to survive a decline in income

Since precautionary measures were heightened to slow the spread of COVID-19, almost one million Australians have lost their jobs. According to the Australian Bureau of Statistics, Australia lost 7.5 per cent of its jobs between 14 March and 18 April. If you’re one of the many Australians who has lost their job, it’s understandable that you may be feeling stressed about managing your finances.

 

Put together a new budget

The first thing you need to do if your income has fallen is put together a new budget. With a reduction in your income, you’ll likely be looking to reduce your fixed and discretionary expenses. Put together a budget that includes your essential expenses such as your mortgage or rent payments, bills, and groceries. This is also a good time to assess which expenses you can do without until your income rises again.

 

Set up payment plans

Losing your source of income can be stressful, especially when you have ongoing payments to meet. If you’ve put together your new budget and you’re not sure if you’ll be able to meet your regular payments, speak to your mortgage lender and other providers about setting up a payment plan. The important thing is that you do this proactively and keep communication open as having these conversations now will put you in a much better place to negotiate.

 

See what support you may be entitled to

The government has announced a range of support packages available to people who have lost their source of income or have had their income significantly reduced. Check which support you may be eligible to receive and organise all of the details you need to apply. Full details about the Federal Government’s measures to support individuals and businesses are available on the Treasury website.

If you’ve lost your income due to illness or injury and you have income protection insurance, check what claims you are eligible to make and what payments may be available to you.

 

Identify potential savings

When you put together your new budget, you probably identified expenses you could do without such as gym memberships and other discretionary expenses. To identify further savings, check if you can switch to cheaper providers for your utilities such as electricity, gas and internet and consider winding back your mortgage payments if you have been paying extra.

 

Seek advice from financial professionals

In stressful times, it can be hard to look beyond the current period of financial stress. However, this is also an opportune time to reset your financial plan for the future. Take this opportunity to speak with your financial professionals, including your mortgage lender or broker, accountant, and a financial adviser to manage your finances now and into the future effectively.

 

Moving forward

At a stressful time for people, it’s important that you don’t feel like you need to weather financial challenges alone. Taking the time to see what support may be available through the government’s support packages is a good place to start. And to set up a financial plan for the future that also addresses your current financial challenges, make sure you speak to a qualified financial professional for tailored advice.

What to do if your job is made redundant

Being retrenched from your job can be hard to accept. And unfortunately we’ve seen more people lose their jobs lately as a result of the global panic around COVID-19.

The sudden news and shock that comes with that is often the hardest part for people, but it’s important to try not to take it personally. Redundancy is usually not about your personal performance. It often comes down to the performance of your employer’s business, the industry sector in which you work, or even the global economy.

Whilst redundancy can make you feel out of control, there are things you can do to put you back in the driver’s seat for your life and career.

Take control

  • Redundancy payment: Genuine redundancy payments are given special tax treatment, including a tax-free amount related to years of service. Your lump sum payment might be your last pay packet for a while, so draw up a budget. This will help you identify areas where you can economise until you find a new job. Your financial adviser can help you work out the best use for any lump sum you receive.
  • Mortgage: If you have a home loan, contact your lender immediately. You may be able to adjust payments while you are out of the workforce.
  • Centrelink: You may be eligible for income support from Centrelink. Especially if you’ve been made redundant due to COVID-19 – a lot of businesses had no choice but to close their doors, so unemployment has skyrocketed. In response, the Australian Government has been making large injections into the economy, one being the announcement of the Job Keeper welfare package. Be aware that waiting periods and income and asset tests apply, so contact Centrelink as soon as possible. A lot of the usual paperwork has been waived for those seeking Job Keeper payments, but you’ll still need to wait either in line or on hold. Go to www.humanservices.gov.au for details, and speak to your financial planner to find out what’s best for you.
  • Superannuation and insurance: Depending on your fund, you may need to rollover your superannuation benefit. You may also need to replace any insurance cover you had with your employer super fund. Your adviser can guide you on these matters; firstly, contact your super fund to check your insurance details.
  • New job or new career: Redundancy may be an unwanted challenge, but many people take the opportunity to make the move to a completely new career. This may involve a period of re-training for which government assistance may be available.
  • Other support: Some companies offer outplacement assistance to former employees. Apart from helping you update your CV, find a new job or transition to a new career, outplacement companies can also provide support in dealing with the emotional consequences of retrenchment. If outplacement services are available, always take advantage of them.

The emotional side

At first I was afraid, I was petrified…” Gloria Gaynor sang in her 1978 disco hit “I Will Survive”, and although she was singing about love lost, she could just as easily have been singing about being made redundant from her job.

Remember you can survive… and even thrive!

Some welcome the financial windfall a redundancy may bring, but for others the emotional consequences of losing a job can be serious, varying from feelings of helplessness to deep depression. If you have family members or friends who are not handling their job loss, encourage them to get help. The family doctor is a good starting point or visit www.beyondblue.org.au for further information.

For financial assistance, get in touch with our team today.