6 Ways To Reduce Financial Stress During COVID-19
While there are many lessons we can learn from the current crisis we find ourselves in with COVID-19, one sure lesson we can take away is the importance of being on top of our finances.
The news has been filled with many Australians losing their jobs, incomes decreasing and more and more people becoming reliant on the Government to help assist them to live in this terrible time.
According to a recent survey by the J.D Power Banking Industry, the panic created by COVID-19 has caused a great deal of financial stress among Australians.
According to the survey
- 72% of those surveyed said the coronavirus crisis has negatively impacted their finances;
- 39% are feeling worried or anxious often;
- 37% are losing sleep;
- 10% are unable to afford enough food to eat
So, what are some quick and easy ways we can reduce our financial stress during the pandemic?
1. Review Your Emergency Fund
Ideally, it is a good idea to have at least six months of your living expenses saved up so if something were to happen to your job you would be comfortable and able to ride out at least six months of having no income.
Unfortunately, it is not an ideal world and saving this amount of money is difficult. Therefore, even having three months or one month of expenses is better than none.
If you don’t have an Emergency Fund, now is as good a time as any to make one.
This account should be set up and only accessed in an emergency. Once you have put away a set amount that you think will cover you, leave the money there and hopefully you’ll never need to dip into it.
Just knowing that you have that money sitting there is a great way to reduce your financial stress by simply knowing you have a backup plan.
2. Insurance Review – Part 1
Boring? Yes. Important? Absolutely.
We have insurances for so many things. Our home, car, contents, health, life, income, phone. the list goes on.
It is easy to lose track of what we are paying for each of these, and the cost can easily add up. When was the last time you reviewed what you are paying and if there is a better deal available? Have you ever?
Aim to review one type of cover at a time. This way, it is not too overwhelming. If you can find a better deal, great. If you can’t, even better!
Imagine how much money you can save by getting better deals on all of your insurances.
3. Insurance Review – Part 2
While you are reviewing the costs of your insurances, also take the time to ensure you are covered correctly.
- Is your cover sufficient for your current situation?
- Do you have too much or too little?
Would you and your family be provided for and financially comfortable if something unexpected happened?
While thinking of a worst-case scenario can be daunting, picturing what would happen if something were to go wrong is crucial in determining if you are covered correctly.
While you are at it, also check your Will and superannuation beneficiaries and ensure these are up to date and accurately reflect your wishes.
4. Negotiate A Lower Rate
Interest rates are at record lows.
If you are paying down a home loan or have a personal loan, now is literally the best time in history to ensure you are getting a good deal.
Check your current rate. How does this compare to the rest of the market?
There are loads of comparison sites to compare the rates of all the different lenders.
If your current rate is much higher than those in the market, give your lender a call and see what they can do. If they won’t budge, consider changing lenders.
If you borrowed through a broker, give them a call and see if they can help you negotiate a better deal.
Loyalty doesn’t pay when it comes to borrowed money.
5. Track Your Spending
Saving is way more fun than spending. Said no one. Ever.
While it may not be fun, saving is an area which has one of the largest impacts on whether or not we get ahead or fall behind and how quickly this happens.
You will be surprised just how much money you spend on little things which all adds up.
A simple way to track your spending is by putting everything into a spreadsheet.
You don’t need to give up all of your little luxuries, but simply knowing where your money is going each week, month, quarter and year can have a profound impact on your overall financial health.
6. Set Up An Investment Account
If you have set up an emergency fund, reviewed your insurances, know where your money is going and negotiated a great rate for your home loan, well done. You should already feel a lot less financially stressed.
So, what’s next?
Perhaps you should set up an investment account.
Investment markets are currently down due to COVID-19 and there are plenty of opportunities to buy shares in some high-quality companies at discounted prices.
The younger you start investing, the better, as your wealth has more time to grow.
A common mistake is that people think they need thousands of dollars to start investing. There are now so many options to choose from where you can start with as little as $50 and some companies even allow you to invest your spare change.
Doing these little things adds up. By being smart with your money and making a conscious effort to get on top of things, you can do wonders for your financial health and reduce stress.
All of this doesn’t require much effort, but it does require action. Don’t let procrastination get in the way of making sound money decisions today. Your future self will thank you for it.