Financial Tips That Can Help Everyone in Australia
These times are hard and it is getting even harder to live as the Covid-19 pandemic develops further. The pandemic is far from over and so are our worries. IMF has reiterated it twice now that the world is going to see an economic crisis worse than the Great Depression and the World Bank recently stated that the economic crisis heading our way is the worst yet in the last 150 years.
What this means is that an average person needs to take some preventive measures in light of these warnings that are being issued by global financial institutions. The Australian economy isn`t has highly exposed as some of the other economies of the world and this means that the Australian economy so far has been able to provide a cushion to the people, however as this economic crisis becomes prolonged, the economy will lose its ability to cushion the people and the Australians may start to feel a more direct impact. It is therefore only prudent to take some precautions.
Australians and others in general can do a bit with some personal financial management at the moment. So let us look at some key personal financial management tips that everyone can do with right now in order to fortify their financial position ahead of the financial and economic crisis.
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Look For Alternative Sources Of Income
Having an alternative source of income can be a great comfort especially in times when unemployment is on the rise. So try to look for ways to supplement your income. Yes finding a job will be difficult at this time but there are also new avenues opening up that people can take advantage of.
Online freelancing for example is a great way to earn some serious cash. Some freelancing are taking home six figure earnings annually. Freelancing can be a great way of earning additional income especially if you have got some highly professional skills because the higher your skills are the more you will get paid.
Apart from online freelancing, there are also a ton of other side gigs that can be done in order to supplement your income. For example
- Renting out extra space in your home on AirBnB
- Part time Uber/Lyft
- Youtube
- Gaming live stream
- Sell instructional courses on Udemy
- Sell stuff on Amazon
- Babysit
Basically, you can utilize your spare time to create a bit of alternative income source. This will create an additional financial cushion for you.
Start Keeping Budgets
Yes, making budgets sounds like a cliché but trust me this is one thing that you are not going to regret. A budget is not just some fancy personal financial management tool, it is a way to keep track of your income and expenditure.
Making a budget will allow you to know exactly you much you are earning, how much you are spending at present and how much you can afford to spend from your earning. Creating a budget will also allow you to determine y our current savings rate and then increase it to the extent that you think is necessary.
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Thus a budget will give you a good grasp over your financial limits, it will give you an item by item breakdown of your income and expenditure and therefore you can go for cost cutting in a much more planned manner. Through your budget you will be able to create a priority list of expenses and then you can easily cut down expenses that you do not need to incur. Doing so will help you take your savings rate up and plan for the future in a better manner.
Go On a Saving Drive
Times are changing; you may have noticed that Covid-19 has caused us to change our lifestyle well this means that we can change our spending habits to increase our savings rate because at this point going back to pre Covid-19 lifestyle doesn’t seem possible, at least not in big cities because as long as the virus is out there, people will always be at a risk.
What we can do is try to look for ways to increase our savings. Do you really need to pay for your cable and tv subscription? Netflix and other streaming services are rising in trends and people are increasingly consuming content on these streaming sites, if you do not watch a lot of tv then perhaps it will be easier and cheaper to get rid of TV subscription. As for the news you can live stream news channels over the internet.
Similarly you can look for other ways to increase your savings. This will be different for everyone as we have all got different lifestyles and priorities in life. Start off with the things that you think you do not really need or don`t use that much.
Emergency Fund
If you haven`t already got an emergency fund then this is the time to set one up. An emergency fund is exactly what the name says it is. It is an emergency fund that can help you in case you get unemployed, come across any medical emergency or any other personal emergency, perhaps your car breaks down all of a sudden or the house needs repairs. The emergency fund can act as a buffer between your budget and becoming indebted.
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Suppose that if you get unemployed, how will you afford your expenses? Your emergency budget can in this situation give you a financial cushion of a few weeks or months and you can use this time to think of what to do next, similarly if a sudden medical emergency arises then the fund can help you pay off medical debt. For most people who do not keep an emergency fund the only alternative is to go to a bank for a personal loan or apply for a pay day loan and this is the first step towards becoming indebted. At this situation our priority should be to remain as far from debt as possible.
Work On That Debt
Debt can be the most stressing thing in times of financial crisis, it comes crashing down like an avalanche especially if one goes out of employment. At this moment if you have got debt and if you have also got a job then you should try to cut down on your debt as quickly as possible. If you have got credit card debt then try to prioritize paying it off. Credit card debt can accumulate and it can carry some very high interest rates, therefore it should be paid off at the earliest.
You may not be able to pay off mortgage and other personal loans early due to early payment penalties but perhaps if you think that your mortgage payments are too high then you can perhaps refinance your mortgage if your lender allows you. By stretching out the mortgage over a longer term perhaps you can get a lower monthly mortgage payment.
These are some of the key personal financial management tips that every Australian should follow. Although a few more tips can be added to this list but these are the core tips that you can find in any personal financial management plan. Even if there isn`t an impending financial crisis, these tips should be followed to keep personal finance in order but it has become imperative to follow these tips under the current economic situation.
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