When it comes to money, jobs or living life in general it seems nothing is the same as it was pre COVID-19. In this article, money coach and financial counsellor, RAEWYN BLOMFIELD provides tips and guidance on what you can do when your financial situation is impacted or influenced negatively by issues that are outside of your control.
Right now both Australia and the world have entered a financial crisis of a proportion not seen since WWII. It is massive. The future is unknown, a yawning chasm. What does all this economic doomsday talk mean for you?
75% of the population appear to be wringing their hands, wondering what the heck to do now, the other 25% saying “See, I told ya to have an emergency fund, no, not that piddly little thing, a decent sized emergency fund”.
Neither attitude is very helpful.
All very well to tell yourself to stop freaking out and start thinking about how to manage the heavily depleted finances right now, but how do you cope when no one knows how long this will go on for? And underneath it all is this gut churning panic and fear for the future.
Identify Your Money Values
In everyday life, it’s very easy to let the important be ground underfoot by the urgent.
To quote Maya Angelou…
“If you don’t like something, change it. If you can’t change it, change your attitude.”
The Covid-19 lockdown has given everyone the opportunity to slow down, reconnect with families, re-examine their money values and from there, their money priorities.
Is your spending in line with your values? What do you need to change? What would you give up to keep this money value alive?
Know Your Figures
The less money there is available, the more important it is to know where that money is going. Knowing your figures is essential; if the spend is predictable, it’s controllable.
Now is a great time to assess your spending pattern for spending leaks (constant little overspends that ruin your budget) and for what you have categorised as your wants and needs.
However, separating out wants from needs is not always straightforward. Anybody can work out if they need the item, and if the item is needed right now.
Not so easy are situations such as assessing your monthly bills:
- Do I use all the features I am paying for?
- Can I get the same features elsewhere cheaper?
- Can I swap for a plan with fewer features at a cheaper rate?
- Can I get a discount from the company? A rebate from the government?
It’s always worthwhile to phone the company to discuss your situation. Never have companies been so sympathetic to a customer wanting out of a locked in contract situation.
What really trips people up is the expense which seemingly came completely out of the blue:
- The car maintenance bill which comes in at double what you allowed for
- The unexpected request to go interstate on family business
- The five year drivers’ licence renewal you had totally forgotten about
- The gobsmacking cost of state school fees, uniforms, equipment and excursions for a student to move from primary to high school.
Cash is King – Plan B
Should you shuffle assets to free up cash? Trade in the car for a cheaper one? Clear out the junk room and let it? Sell some stuff which is hardly ever used?
It is always important to have a Plan B in case you have to lay your hands on cash quickly.
Create or Revise your Emergency Savings Plan
There are always financial emergencies. The big unknown is when will they occur and how big will they be?
To prepare for the next upheaval, look back over the last 12 months’ spending.
Pick out the occasional costs, including your total Christmas spend, and total them up. There’s the absolute minimum you’ll need in savings.
Think about how you will allocate your money differently in order to save that amount of money.
The best way to get ahead of the game is to consistently save money into an out-of-reach account and keep doing that for years, allowing the twin benefits of time and compound interest to work their magic.
I would love to work with you to give you the skills you need to move forward on your financial journey and to better prepare you for the future. With your spending controlled you can then start to create for yourself and your family a better lifestyle and more secure future.
Money coach and financial counsellor, Raewyn Blomfield, is the principal of Money Health Money Wealth. Raewyn helps people to manage their money and take control of their spending and debt so they can achieve their financial dreams. If you would like to find out more about her services you can contact Raewyn by calling her on 0468 317 259 or simply send her an email.
General Advice Warning: This blog is not designed to replace professional advice. It has been prepared without taking into account your objectives, financial situation or needs. You should consider the appropriateness of the advice, in light of your own objectives, financial situation or needs before making any decision as to what is appropriate for you.