Gaining certainty when the future is uncertain

COVID-19 led to an economic shutdown that resulted in job losses, closed businesses, loan deferrals, emergency account and superannuation withdrawals and other painful financial setbacks.

With the pandemic causing so much uncertainty around the world, many of us feel paralysed when it comes to our finances. But with sound financial practices in place, you may be able to gain some certainty to take on what comes next.

To put yourself in a solid position to tackle any unexpected setbacks, you could start by taking an honest look at your finances, understanding your financial priorities and creating your own financial buffers.

So, let’s take an honest look at your finances

If you don’t have a clear idea of what money is coming in and going out every month, then this may be a good start. Building a budget and tracking your spending may assist.

Once you have a better idea of your cash flow, you can then look at your expenses to see if you can start to make some additional savings.

Don’t forget your debt

If you’ve assessed your budget and feel as though most of your income is going towards paying off debt, it might be a good idea to look at ways to pay down and reduce your debt. Whatever your position, it’s time to get well-acquainted with your debt.

First, make a list of all of your debts, which may include any loans, credit cards and buy-now-pay-later accounts. Then, work out what your repayments are and prioritise your most expensive or pressing debts.

Once you’ve done this you can make a plan to tackle them, which may include:

• making additional repayments
• paying off your highest interest loans first
• or exploring debt consolidation

While you’re at it, it might be the perfect time to understand how your debt is affecting your credit score and what you can do about it in an effort to improve your ability to access lines of credit should you need them in the future.

Learn how you can get your debts working for you >

Look for the bare necessities … the simple bare necessities

The next step is to look at where you could potentially shave off any unnecessary expenses. By reducing your monthly spend by as much as possible, you’ll be in a better position if things hit the fan again next time.

It may be as simple as asking yourself things like:

• Is your phone plan more expensive than it needs to be?
• Are you paying for subscription services that you don’t use?
• Are you spending too much on food delivery services?
• Do the premiums your insurance company charge stack up?
• Is running your air-conditioner throughout summer costing you too much?

Prioritise your expenses to understand what your ‘needs’ are and if there are any opportunities to save some additional money from your ‘wants’. Prioritising your expenses could also help you decide where best to allocate funds should you need to cut back further in the future.

Use our savings booster calculator to see how small changes can lead to big savings >

Last but not least, consider building an emergency fund

If something unexpected happens – and you’re hit with a big financial blow – it’s important to have the peace of mind that you’re going to be okay. One way to help with this may be to build yourself an emergency fund.

Most experts agree that your emergency fund should be big enough to cover 3-6 months of your expenses. Depending on your income, this may seem like a daunting prospect, but don’t stress – that’s why you’re preparing now to build this financial safety net over time.

Read more about how to build an emergency fund >

Get ready to hit the next curve ball out of the park

Life’s unpredictability can certainly be stressful, but sensible planning and money management may help you can take control, improve your stability and overcome certain financial challenges. If you’re experiencing financial difficulty, it’s important to know that there’s support if you need it.

Visit our financial assistance hub to learn more >