How to prepare your finances now for life after COVID-19

This article is authored by Andrew Dunbar, Director of Apt Wealth, part of the Career Money Life Supplier Community. You can view the original article on Apt Wealth’s website.

As restrictions start to lift and life begins to look a little more like it used to, it’s important to be prepared for changing financial goals and challenges. Many of us have experienced a reduction in income and changes to household expenditure during COVID-19, and this may change once again as we enter recovery.

Now is the time to start planning your post-COVID finances to ensure you can get back on track with your goals. Here are our tips for navigating your personal finances in a post-COVID world.

Revisit your goals to align with your values

During COVID-19, many of us found that our values changed, whether it was about more time with loved ones, saving more money or changing our lifestyle. Your spending habits are a reflection of your values, so it’s a good time to revisit your financial goals and ensure they align with what’s really important to you.

Setting financial goals without understanding your bigger purpose is a little like planning how you’ll get to your destination before you’ve decided where you’re going.

Understand the impact of changes to financial support

If you have been receiving support from the Australian Government stimulus package, it’s time to start thinking about what you will do once this comes to an end. Whether you have been receiving Job Keeper, small business tax relief, childcare fee waivers, or access to your superannuation, it won’t be there forever, so it’s a good time to start planning for life without this additional support.

If you are eligible to access your super, you need to think carefully about whether you will take this up. The first $10,000 must be accessed by 30 June and you have until 24 September to claim another $10,000. Whether you should access your super and how you should put it to use really depends on your individual circumstances, but you can read our tips here.

Many financial hardship clauses, such as mortgage repayment freezes, may be coming to an end or may not be renewed after the initial period. If you are relying on continuation of support from lenders or suppliers, it’s best to speak to them as early as possible to get an accurate picture of your options.

Set or revise your budget

It’s important to set a budget as we all navigate changing financial circumstances. For some, this will be about managing reduced income, for others it may be about continuing to save.

Forced changes to spending habits have seen some of us able to put a little extra away, and although social options are opening up to us now, it’s a good idea to think about how you will capitalise on any savings you have already made. If you need help setting your budget, our free budget planner is a great place to start.

Build your emergency fund

If you don’t have easy access to the funds to cover at least six months of your basic living expenses, this is a great goal to set as we enter recovery. The current situation has shown us that we really don’t know what is around the corner, so it’s a good idea to start planning for how you will work towards building this buffer.

Review your income and life protection

The sudden change to the way we live combined with health fears have led many of us to think about our personal income and life insurances. With around 96% of Australians underinsured in this area, it’s critical to think about whether you have enough protection to maintain your family’s lifestyle in the event of accident, injury or illness. It’s common to rely on the insurance in our super, but for many this isn’t adequate cover and may even be costing the same or more than the right cover.

Structure your superannuation to weather storms

COVID-19 exposed financial vulnerabilities in many areas, including superannuation. The good news is that you can structure your super to weather the next financial storm and ensure you are still on track for the retirement you want. You can read more here or contact Apt to find out how we can help you put a structure in place.

Be aware of COVID scams

Many financial scams are using COVID-19 and the vulnerabilities it has created to swindle people out of their money. Scammers are using increasingly sophisticated methods to get access to your funds, preying on health concerns and money worries. You can read our tips for identifying and protecting yourself from scams here.

Seek professional advice

According to research by the FPA, Australians who receive financial advice are generally happier than those that don’t, and it’s easy to see why.

It’s a common misconception that a financial adviser will want you to change your lifestyle. In reality, your financial adviser should be your personal finance coach who helps you achieve what you want out of life, whatever that may be. At Apt, we’ve helped over 3,000 families achieve their life goals, ranging from once in a lifetime trips to early retirement – and everything in between.

Apt Wealth is one of the amazing financial partners offering best practice advice through Career Money Life. Employees impacted by Covid19? We can help. Learn more about our FREE Career Transition Support and Employee Webinars.

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