As cases of COVID-19 increase daily around Australia, it’s natural that your number one concern is the health of your loved ones. But it’s likely that protecting your financial future will also be high on the agenda as the situation evolves. So, here are a few suggestions for how you may be able to minimise the impact of the COVID-19 on your personal finances:
Take advantage of lower interest rates
A fifth RBA rate cut on 19 March brought the official cash rate to a new all-time low of 0.25 per cent. Banks are also competing hard for customers. This means that now could be an excellent time for you to get a great rate on your home and investment loans. You should start by asking your Smartline Adviser to negotiate with your current lender for a more competitive rate. You may also want to discuss the option of refinancing your loan(s) with another lender to take advantage of the competitive lending environment.
Talk to your bank if your income is affected
As Australia progressively shuts down some businesses and services, it could temporarily impact many people’s incomes. Small business owners, casuals who don’t have any leave entitlements, and those in industries where working from home isn’t an option are particularly vulnerable. If you are facing financial hardship due to the impacts of the virus and the measures to contain it, the best way for you to find out how to access mortgage assistance is to contact your lender directly. Information is changing daily and our lenders all have their own assistance packages and criteria.
To help you with this, we have put together a list of the COVID-19 support contact numbers for each lender, which you can access here.
Monitor your shares
Stock markets have been decimated by fears of how the coronavirus will affect companies’ financials. It can certainly be scary to watch your share portfolio lose value day after day. However, selling stocks after a huge market sell-off is possibly the worst thing you can do for your long-term financial health. Remember that these losses are on paper only, but if you sell, you are cementing your losses. Stocks should generally be a long-term proposition and the goal of investing is to buy low and sell high. In fact, if you are in a financial position to buy shares, now may be a good time to discuss your options with your financial adviser.
Avoid panic buying
Don’t over-buy items, especially not on credit. Aside from the fact that stockpiling means other Australians can’t buy things they need, some items are more expensive than they should be (such as hand sanitiser). Overbuying will likely blow your weekly budget and if you are paying on credit, it could mean you incur more interest.
Try to limit spending money overseas
The Australian dollar is at a 17-year low. When our dollar is worth less, it means buying in a different currency costs more.
Now is not the time to spend unnecessarily. We don’t know what the next few months will look like, but suffice it to say, having some financial back up is a good idea for everyone. Spending only on necessities can help you build up an emergency fund in case you need it later.
As a general rule, try not to panic. Panic tends to lead to irrational behaviour, including poor financial decisions. The situation is uncertain but we should all use our common sense and remain calm and know that this too shall pass.