Top financial tips for your family to cope in the COVID-19 economy

by Finance Expert, Nicole Pedersen-McKinnon

Nicole Pedersen-McKinnon is a long-time Fairfax money columnist, television finance commentator, financial literacy educator, presenter and campaigner for better family finances. A mother of two children, she has also been Fairfax Media’s popular ‘Money Mentor’ and ‘Nicole Helps’ columnist for 15 years. 

This is a confronting time. There’s that old adage that adversity makes you stronger… love that. But it’s worth acknowledging that life can be damned hard at the moment!

So here are my five proper, practical tips to streamline your finances in this COVID craziness.

1. Sort out your main expense

Hands down, that’s going to be the mortgage for just about every family with one in the country.

Even if you only have the average debt of $400,000 (which will be making Sydneysiders and Melbourne-ites cry into their coffees), the monthly expense of a Big 4 rate is $2219 (at 4.48 percent interest).

However, switch that to the best-quality rate in the country, and you could instantly slash almost $400 off your monthly outlay. Note: You don’t just want the cheapest loan, you want the cheapest loan with a real-deal offset account (2.32 percent at the time of writing). That is an offset account that genuinely protects your money, with the Australian government deposit guarantee. Ask.

2. Slash your so-called fixed costs

There is no such thing as a ‘fixed’ cost. We’ve already talked about cutting your mortgage. You can make similar savings in virtually every expense in your life. Think your utilities, insurances and telcos. The sites I love to price check and then negotiate with these guys are:

• (or in Victoria) for electricity and gas;
• for all your telecommunications (just be sure to scroll down to the actual best deals);
• for most of your insurances (but uncheck the ‘only show results that link to a quote page’ box first); and
• for your health insurance (this one’s excellent and government-run).

And top tip: some health insurers are giving premium waivers in COVID-19 of three months and even more if you are in hardship.

Check out how much you could save today. And speaking of your big expenses…

3. Streamline your probably second-biggest cost

Childcare expenses and access – let’s face it – have been a rollercoaster the past six months. Families who have lost income and are experiencing financial hardship may be eligible for additional support through what’s called the Additional Child Care Subsidy (temporary financial hardship).

In the rest of the country, it’s back to ‘business as usual’ with normal Child Care Subsidy conditions applying. Having said that, the activity test that determines how much money you get back has been eased until April 4, 2021.

Families whose employment has been impacted by COVID-19 will get up to 100 hours per fortnight of subsidised care during this period. What’s more, job hunting, studying, starting a new business and volunteering all count as eligible activities. There’s more on how you can trim your childcare costs here.

4. Cut your discretionary spend

We all hate this one I know; it’s the hard yards. But if you’ve done the previous three steps right, it shouldn’t need to be that painful. You’ve already made significant savings.

One of the best techniques I’ve ever come across to slash your spend – and, happily, it works beautifully in a pandemic! – is to ‘cocoon’. Recreate a restaurant, bar, nightclub experience at home. Have a cocktail evening with friends (by Zoom or if you’re allowed, socially distant). You play loud music while doing all this, with apologies if you live anywhere near me! Your potential saving is probably enormous.

5. COVID presents massive opportunities to save

Whether you’re in lockdown or less-prescriptive slowdown, you were probably previously spending a lot on not just entertainment but potentially activities for kids and holidays.

Think about just how much. Then check out your bank statements and see what you are saving. You’ll probably be surprised how much better your bottom line is looking… just by virtue of the virus.

But the forced frugality – and quieter, possibly more financially stressful life – could be getting you down. Don’t miss that your children may be struggling with the abrupt change too.

If they or you need to talk and get some coping strategies, call Kids Helpline on 1800 55 1800 or Beyond Blue’s dedicated COVID-19 mental wellbeing support service on 1800 512 348. The government has just announced far more funding for mental health services.

Save money. Stay safe.

Need assistance with working out how to maximise your Child Care Subsidy? Our Family Support Team is ready to help – contact them on 1800 314 517.

*Information provided in this article is general in nature and does not constitute financial advice. Before making any decisions, families should take into account their individual circumstances and consult with their professional advisors.