Government measures including JobKeeper and the Coronavirus Stimulus Payment are due to expire at the end of this month, and it’s leaving many Australians worried about the fallout when the JobKeeper payment ends. CommBank recently predicted that the withdrawal of the JobKeeper end date on the 31st March could put as many as 110,000 people’s jobs on the line, and for welfare recipients, these payment cuts will set them back nearly $100 per fortnight.
With the road ahead set to be challenging for many, having a solid crisis budget and plan in place is crucial to getting through tough times. Read on for five tips to help you manage your finances while on a reduced income, which can help you stay afloat without JobKeeper after March 2021.
How to Manage Your Finances After JobKeeper Ends
1. Look for extra income
If your main source of income is being cut off, it’s worth exploring alternative ways to bring money through the door. See if you qualify for government income support such as JobSeeker which will be raised by $50 a fortnight from 1 April 2021. Under the new JobSeeker program, fortnightly payments of up to $620.80 will be doled out to single people with no children, while couples will receive up to $565.40 each (or $1,130.80 in total).
Also consider other potential income you could be sitting on, whether it’s interest you’ve accrued inside a high-interest savings account or sellable items you have sitting at home. Did you know, for instance, that the average Australian household owns over $5,000 worth of unwanted goods, according to Gumtree’s Second Hand Economy report? So instead of throwing away your old clothes or electronics, putting them up for sale on sites like Gumtree, Facebook Marketplace and ThredUP could help you earn a few quick bucks.
2. Find ways to cut your costs
Once you have a clearer idea of your income situation after March, it’s time to turn your attention to expenses. If you haven’t got the time or energy to sift through pages of your bank statements, the good news is there are plenty of free budget and savings apps that track and categorise your transactions for you, helping you spot potential areas to reduce spending.
Start by looking at your ‘needs’ or essential costs (e.g. rent or mortgage repayments, utility bills, groceries, transport). While you won’t be able to eliminate them from your budget, you can certainly cut back on these expenses by shopping around for a better deal. That could mean switching to a cheaper energy plan or insurance policy so you aren’t paying more than you have to. For instance, if you’ve been driving less during COVID, you could snag a premium discount by opting for pay-as-you-drive insurance.
Then with the money you’ve saved up, you can set aside a small reasonable amount for some of your ‘wants’ or the fun stuff (e.g. eating out, non-essential retail purchases, video streaming and other subscriptions). Better still, brainstorm ways to have fun without spending money. Examples may include: swapping out a gym membership for home workouts or hosting a potluck dinner with friends instead of going to a restaurant.
3. Build in a savings buffer, where possible
For anyone on a shoestring budget (especially when the JobKeeper payment ends), saving up even $50 or $100 a month can be difficult. But to stay prepared for any future financial headwinds, it’s important to keep stashing away money whenever you have the capacity to do so. Your aim with an emergency savings fund is to have enough to cover at least three months’ worth of essential expenses.
So how do you prioritise saving? One great tactic is to pay yourself first. Instead of waiting till the end of month to funnel any leftover income into your savings account, deposit a set percentage into your rainy day fund the moment you get paid. Some banking apps now offer to automate this process for you every pay day, while others have even more features like roundups to help you save. With roundups, all your transactions are rounded up to the nearest dollar, with the difference automatically transferred to your savings account.
4. Address your debts
If you’ve been struggling to meet credit card or loan commitments due to a job loss, reduced employment hours, or the JobKeeper payment changes, sticking your head in the sand can only make things worse. While no ‘magic pill’ solution exists, there are steps you can take today to help fix the debt problem you may be facing.
The rule-of-thumb when juggling multiple debts is to start with either the highest interest rate (so you can get rid of the biggest ‘killer’ first) or the smallest amount (so you can celebrate small successes along the way and stay motivated). Whichever method you go with, just remember to also make minimum repayments on all your other debts, so you don’t get slugged by late fees and interest charges.
Switching to a more suitable banking product could also provide some relief. For instance if you have credit card debt, then a 0% interest rate balance transfer card can give you breathing space to pay off your existing balance. According to Mozo data, the intro 0% rate period can range from 6 months up to 36 months.
5. Talk to a professional
Finally, there’s no shame in asking for help if you need it. Despite the stigma around talking about debt, having those difficult money conversations with a loved one or a professional can actually alleviate some of your stress when the JobKeeper payment ends.
If you feel trapped under piling debt, services like Credit Counsellors Australia are available at no cost. You can call for a free and confidential debt assessment to learn about your options and make a more informed decision about how to pay debt after JobKeeper ends. We can help you arrange a more feasible repayment plan, an informal debt agreement with your creditor, or if the situation is more serious, we can help you organise a more formal arrangement (such as a debt agreement or bankruptcy). Call us on 1300 003 328 to get started on your debt-free life.
Katherine O’Chee is a personal finance writer at financial comparison site mozo.com.au where she spends her days digging into banking fine print and sharing her latest money tips with Australian consumers to help them make smarter financial decisions.