Our daily routines aren’t the only things that have gone out the window during the COVID-19 pandemic. Our spending habits (and subsequent money management) have entered new realms of unpredictability, too.
The COVID-19 pandemic (and various stages of lockdown) has changed the way Australians spend money. It’s a given, then, that it has impacted the way we save money, too. It’s even feasible for it to have had a knock-on effect on how you think about and manage your finances.
Let’s be honest: we hardly feel inclined to check our bank balances when a second coffee run becomes the highlight of our weekdays in lockdown.
Plus, we all want to support local businesses during these trying times. So even if you aren’t spending more, you’re likely to be spending differently. After all, those random living room nooks don’t become fully-fledged home offices by themselves!
So, if you have found yourself in a lockdown or at the mercy of travel restrictions, you could use the time to do some financial housekeeping. Read on for a few ways to use this newfound time to improve your money management.
First step: look at your recent spending
It can be confronting but start by taking a look over your recent outgoings. If you don’t have existing tools in place to track what kinds of spends you’re making, now is a good time to start organising. Many banking apps allow you to categorise or ‘bucket’ your spending so you can see exactly where your money is going (utility bills, rent, take-outs, etc.).
Make a budget
Now you’ve looked over your recent spending, move everything into a spreadsheet. It helps to manage the confronting steps of deciding if you’re spending too much on certain things. Then, make a budget for how you’d like to spend and save while in lockdown (or during the COVID-19 pandemic in general). Remember to be realistic with your goals – no one needs added stress right now!
While you might not be spending more or less each month, it’s worth looking at when and how you’re spending. Any essential shopping you budget for, like groceries, will likely become less frequent but more expensive per shop. Understanding how you’re spending will also stop you from feeling guilty if a weekly trip to the supermarket seems pricier than the four-per-week shops you would usually make.
Check-in with your debt
If you’ve lost income due to COVID-19, you may be eligible for government assistance. You can also speak to your bank, landlord, and utility providers to discuss payment plans or pay breaks. Here are some practical steps you can take if this applies to you.
Consider discussing payment option plans or financial hardship assistance with your lender or credit provider. Free financial counselling is available via the National Debt Hotline on 1800 007 007.
If you’re in a position to continue making repayments, it could be worth re-evaluating your ability to increase those repayments or consolidate different debts. If you have found yourself spending less while in lockdown, it could be a great time to take advantage of the extra cash flow and tackle any outstanding debt. If you decide you’d like to pay off any debts early, check there are no penalties in place that could lead to surprise charges.
Move or consolidate your super
All the above applies to your super fund, too! It’s another one of those life admin things that requires time – though, not to brag, it only takes five minutes to join Verve! A few things to keep in mind when checking your super:
- Are you happy with your super fund?
- Do you know where your super is being invested – does investing in those companies or industries align with your values, ethics, and hopes for the future?
- Has your employer been making the required contributions?
- Have you got more than one super fund that you’d like to consolidate into one?
- Do you understand what fees you’re paying?
- Are you aware (and making full use) of any extra benefits offered by your super fund? Are there other things you’d like them to help you with?
- Have you checked your returns lately? Reminder: superannuation is a long-term investment, returns can fluctuate and that is ok. Here are some tips on how to judge your super fund’s performance.
If you’re a Verve member, then may we also suggest:
- Get stuck into some of the financial resources and events available to you as a Verve member.
- Spread the love! Encourage your mates to love their super fund as much as you do.
Organise your insurance
Insurance is one of those things that can require time and research. Now you have some time on your hands, why not dive into the world of insurance; health, contents, home, car, income protection, pet, life! It’s also worth reviewing any existing insurance cover to ensure you’re getting cover that suits your needs at an affordable price.
For example, your car insurance might cover your car for work purposes. If you’re no longer using your car for work or are just using it less day-to-day, it could be worth reviewing your cover to reflect your current circumstances.
Don’t forget: you may be able to access life insurance through your super fund. Eligible Verve members can apply for death only, death and total & permanent disability, and income protection insurance cover, and pay for this cover with their super. Here’s more information on insurance, including how to apply.
So you’ve set your budget and you’ve paid off bad debt (or you’re well on your way)? It could well be time to start your investing journey. That’s right, get excited!
There’s a lot to consider before you start investing, but we like to apply the same ethically-minded thinking that we have with super. For many, it’s important to choose investments that align with your values and hopes for the future.
Begin by understanding your investment goals and risks. In setting your investment objectives it’s important to decide if your goals are short-term (0-3 years), medium-term (4-6 years), or long-term (7+ years and retirement).
You’ll then want to understand different types of investment and their associated risks. Here are some handy steps for understanding your investment goals and risks.
From there, it pays to research the kinds of companies you feel aligned to. In the same way, it’s helpful to make a list of companies you absolutely do not want to invest in!
The key to investments is to keep learning! The more you start learning about investments, the more you’ll want to know next. Our tip? Buckle up and get stuck in!
If you’re a Verve member, you can jump straight into Step 5 of our Money Guide: ‘Investing 101’.
One thing to remember: it’s totally okay to feel a little thrown out of your groove during this time. We’re treading new ground, so any steps you can take to feel in control (finances, daily routine, etc.) can go a long way to helping your overall mindset.
Also, don’t be afraid to reach out to professional advisors like your accountant or financial planner if you need some help deciding what money management tips would be most appropriate given your personal objectives, financial situation, and needs.