Money coaches reveal how to protect your finances during coronavirus
How to protect your money during the COVID-19 crisis: Finance coaches reveal how to ‘save smart’ and cut down bills in the coming months – and why you should NOT touch your super
- Molly Benjamin teaches women to be independent by taking charge of finance
- She works with money coach Betsy Westcott to empower girls to ‘save smart’
- The duo shared simple steps for financial security during and after COVID-19
- Upskilling with free TAFE courses is an excellent way to future-proof your career
- Debt with interest of more than 10 percent should be prioritised and paid quickly
- Early withdrawal of funds from your super should only be used as a last resort
Two leading financial advisers have cautioned Australians against withdrawing money from superannuation to get them through the coronavirus crisis, and to focus on paying off high-interest debt.
Molly Benjamin, founder of Ladies Finance Club, a Sydney advisory agency which teaches women to take control of their financial futures, said house-bound Australians now have more free time than ever to organise their finances.
Ms Benjamin told Daily Mail Australia how we spend this time will directly determine our financial health and job security in the post-coronavirus world.
She said it’s crucial for women in particular to ‘switch on’ to financial discussions because they face unique challenges which see them ‘retire on less and earn less than men, while still living longer than men’.
Together with top money coach Betsy Westcott, Ms Benjamin has broken down complex issues like compound interest, insurance, debt and eligibility for government support payments to help people cope with financial stress as the pandemic continues.
Money coaches Molly Benjamin and Betsy Westcott are teaching Australian women how to take charge of their financial futures during the uncertainty the coronavirus crisis
1. DON’T TOUCH YOUR SUPER
From April 20, furloughed workers and those who’s income has been reduced by at least 20 percent because of the coronavirus shutdown will be allowed to withdraw up to $20,000 from their superannuation fund, tax-free.
The first $10,000 will be made available from mid-April to July 1, and the second $10,000 from July 1 for roughly three months after that date.
Ordinarily, strict rules block people from accessing their superannuation until they hit retirement age of between 55 and 60.
More than 361,000 Australians have already applied for early access to their superannuation, but Ms Benjamin warned it should only be used as a last resort and not to free up funds for discretionary spending.
‘I don’t think people understand the impact withdrawing will have on their financial future,’ she said.
Ms Benjamin knows multiple cases of young Australians who are planning to access their super to pay off car loans and credit card debt instead of using the money to offset sudden financial hardship as it is intended.
Understanding compound interest
Compound interest is the interest you get on the money you initially deposited, which is called the principal, and the interest you’ve already earned. For this reason, it is sometimes referred to as ‘interest on interest’.
In a savings account or superannuation fund, you earn interest on your initial savings and on the interest you’ve already earned – giving you interest on your interest.
Compound interest is different to simple interest because simple interest is paid only the deposited sum at the end of the period. A ‘term deposit’ bank account usually earns simple interest.
‘You need to think of it in terms how much you could lose,’ she said.
Because of compound interest (which is interest earned on interest itself) young Australians could be losing out on as much as $233,000 over the course of their working lives by withdrawing that $10,000 in the coming months.
Calculations are based on a 65-year-old worker with a superannuation fund which offers an average return of eight percent per annum.
‘The older you are when you withdraw, the less you’re affected because it’s based around interest earned over long periods of time,’ Ms Benjamin said.
If a 25-year-old withdraws $10,000, they could be reducing their super by $233,000 by the time they retire at 65.
If a 30-year-old withdraws $10,000, this equates to roughly $153,000 less in their super when they retire.
Taking $10,000 out at the age of 35 equates to a loss of $100,000, while taking $10,000 at 40 equates to a loss of $63,000.
This chart from the Australian Services Union shows projected losses based on early withdrawal from superannuation. Calculations are based on a 65-year-old worker with a superannuation fund which offers an average return of eight percent per annum.
WHERE TO GO FOR HELP
* Tax relief: if you have a debt to the tax office you can’t pay call the Australian Tax Office emergency support infoline on 1800 806 218
* Unexpected bills for essentials: don’t go to high-interest payday lenders. No-interest and low-interest loans of up to $3000 available from Good Shepherd Microfinance.
* Utility providers will negotiate a payment plan to keep the power, water and gas on – ring them
* Banks will make hardship provisions available if you are having trouble paying your mortgage – call your lender
* Set up a myGov account at my.gov.au so you can access welfare help online
* Go to Services Australia and use the payment and service finder to work out what help you can get
* Access up to $10,000 of superannuation early this financial year, see here
* The first $750 coronavirus supplement will go to those registered as on income support and eligible between 12 March and 13 April. The second $750 payment will go to those eligible and registered on 10 July. Check here
* The new coronavirus supplement of $550 per fortnight is being added to several welfare payments – check if you are eligible here
* A list of Services Australia phone numbers for different information lines from crisis payments to low income health care cards is here
* Visit the Services Australia and register for a Jobseeker Payment or call to register on 132 850
* Centrelink advance payments are available in some circumstances
* You can get rent assistance from Services Australia if you are on a JobSeeker payment.
* National Debt Hotline for free advice and support for those in financial difficulty 1800 007 007
* Ask your employer to register on the ATO website ato.gov.au to keep your job going during the coronavirus shutdown so you can get $1500/fortnight
2. ‘MARIE KONDO’ YOUR REGULAR BILLS
Marie Kondo’s famous decluttering principles for your house can also be applied to your finances.
Drawing inspiration from the Japanese tidying expert’s iconic mantra ‘spark joy’, Ms Benjamin encouraged people to look through loan statements, credit card and utility bills and recurring subscriptions to decide if there is a way to reduce spending.
‘Write down what you are paying, and ask yourself if there might be a better deal out there that can help you save big in the long run,’ she said.
Following Japanese tidying expert Marie Kondo’s ‘spark joy’ mantra, Ms Benjamin encouraged people to look through loan statements, credit card and utility bills and recurring subscriptions to decide if there is a better way to spend their hard-earned money
A simple online search of like-for-like products and services like insurance and internet providers will show you what else is on the market, and how much you could bank by making a switch.
Finder and Canstar are two of Australia’s most reputable online price comparison websites.
Melbourne-based organisational consultant Gemma Quinn previously told Daily Mail Australia that the Marie Kondo method can be applied to all aspects of your life, from relationships and health to finance and work.
‘It’s about tidying up in a way that enables you to live your ideal life and be surrounded by the things that spark joy,’ Ms Quinn said in October 2019.
3. PAY DOWN HIGH-INTEREST DEBT
Any debt with interest rates above 10 percent should be prioritised and paid off as quickly as possible to avoid spiralling costs that become impossible to repay, Ms Benjamin warned.
‘This kind of debt is expensive and taking you backward. Direct any spare cash to knock it over and fast,’ she said.
‘After that, if you have any loans with an interest rate above five percent keep paying them down, but it’s ok to focus on saving at the same time too.’
The longer you take to pay off high-interest loans or credit card repayments, the more money it costs you because you pay more in administrative and finance charges when you pay the debt off slowly.
Ladies Finance Club is running a six-week ‘Money Makeover Bootcamp’ starting on Wednesday, April 15, to teach women how to avoid mounting debt, invest in shares, understand superannuation, buy property and protect their cashflow.
The program costs $475 and is designed for women who want to regain control of their money and stop living from paycheck to paycheck.
Weekly sessions will be held over video call in light of current social distancing restrictions.
Ladies Finance Club is also running a free webinar with Australian debt specialist Lisa Simpson from 8.30pm – 9.30pm on Wednesday, April 8, which will teach women how to create debt repayment plans that work for them.
Register for the webinar on Ladies Finance Club’s official website or via Eventbrite.
How Australia is supporting workers, pensioners and the unemployed during COVID-19
The Australian government has announced a raft of measures to keep Australians in jobs and support those out of work during the coronavirus crisis.
The economic stimulus package is made up of $214billion in direct, on-budget spending from the federal government, individual states and in lending from the Reserve Bank and the federal government.
The handouts from this tripartite initiative are broken down as follows:
WORKERS: $1,500 fortnightly payments to six million workers as part of the $130billion JobKeeper stimulus package starting on May 1.
This caters for businesses forced to stand down staff as pubs, clubs, cinemas, gyms and dine-in restaurants closed to slow the spread of COVID-19.
The payment will be paid to employers for up to six months, for each eligible employee that was on their books on March 1, 2020 and who has been kept on during this time.
UNEMPLOYED: A doubling of jobless benefits from April 27 as the $550 coronavirus supplement is added on top of the usual $565.70 JobSeeker payment. This measure was announced as part of the second $66.1billion stimulus package.
PENSIONERS AND STUDENTS: $750 payments to 6.5million Australians who are unemployed, on the aged or disability pension, are studying for a degree, qualification or an apprenticeship or are parents eligible for Tax Benefit Part B.
4. TAKE STOCK OF WHERE YOU’RE AT
Before opening a new savings account or mapping out lofty financial aspirations for the coming year, you need to know exactly where you stand with income and expenditure.
Ms Benjamin suggests writing a list of everything you own (assets), owe (debt), earn (income) and spend (outgoings), to paint a clear picture of how financially secure – or insecure – you are right now.
The Australian Government’s Money Smart website offers a range of free tools and advice to help you make informed decisions in the midst of the uncharted territory of COVID-19.
Information on consumer rights, early access to your superannuation fund, mortgage and rent freezes and eligibility for government support payments are all available on the site.
5. LEARN A NEW SKILL (FOR FREE)
As the global economy grinds along at snail pace leaving hundreds of thousands of workers either unemployed or under-employed, many find themselves money poor but time rich, with a golden opportunity to learn new and profitable skills.
Ms Benjamin said this time should be used to ‘future-proof’ careers for the post-coronavirus era, and it seems her advice has reached the ears of the New South Wales government.
The state has announced it will make 21 TAFE courses available for free in a bid to help Australians stay productive and entertained at home as lockdown continues.
The courses, which can usually cost as much as $1,570 for 12 weeks of study, cover practical skills across a range of industries including administration, business, computing and management.
NSW Premier Gladys Berejiklian announced the roll out on Monday as more than a million Australians face unemployment, one in ten of the country’s working population.
She encouraged people to use time spent at home to upgrade their skills and prepare for the end of these difficult times.
TAFE New South Wales (pictured) is offering 21 free courses for Australians eager to learn new skills while isolating at home
Online learning platform Udemy has also launched more than 250 free courses for people wanting to study tech and coding skills, web development, photography, time management, productivity and public speaking.
Udemy is also offering free courses on learning an instrument or digital painting.
Coursera is providing learning resources free of charge until the end of May, including lectures and quizzes.
Free tutorials are available on career development, public health, science and even poetry.
The full list of courses is available on TAFE NSW’s website and at the bottom of this article.
6. REMOVE TEMPTATION
While buying coffees and takeaway dinners to support floundering local businesses is both kind and thoughtful, living exclusively on restaurant fare will damage your financial well-being at a time when it’s crucial to protect it.
FIVE SAVINGS TIPS FRUGAL AUSTRALIANS SWEAR BY
1. Never shop without a list
2. Always know what’s in the fridge
3. Live off one income, save the other
4. Always save in cash
5. Pay bills in advance
Source: Budgeting, Food, Savings Ideas, Life Help Australia via Facebook
Ms Benjamin recommends limiting takeaways to once-a-week treats and trying home meal kits every other night.
Meal kit services Hello Fresh and Marley Spoon both allow you to trial a box for free and deliver packages straight to your door.
This means you can cut down on trips to the supermarket and in doing so, reduce the risk of catching COVID-19 and spreading the virus to others.
‘It’s healthy, tasty and convenient food without breaking the bank – plus, you don’t need to think of ideas for what to cook next!’ Ms Benjamin said.
Pricey gym and exercise studio memberships should be regarded in the same vein and frozen until fitness clubs are permitted to reopen.
Tide yourself over in the meantime with the increasing variety of free home workouts available online, which include bodyweight exercises, high intensity interval training, yoga, barre and Pilates.
Many of the country’s most highly regarded personal trainers have shared their favourite routines for free to help Australians stay in shape in isolation, including Brisbane coach Georgio Batsinilas who is the co-founder of the FitazFk fitness programme.
He showed gym-goers how to work up a sweat at home by completing a 28-minute routine of six simple exercises – push-ups, squats, high-knee sprints, lunges, sit-ups and ‘towel rows’, which involves pulling a towel taut and pretending to row with it.
The Nike Training Club, Daily Yoga, Aaptiv and Daily Workouts Fitness Trainer are other examples of free gym apps on offer.
Co-founder of the FitazFk fitness programme Georgio Batsinilas showed gym-goers how to work up a sweat at home by completing a 28-minute routine (pictured) of six simple exercises – push-ups, squats, high-knee sprints, lunges, sit-ups and ‘towel rows’
7. ASK FOR HELP
The breathtaking reach of the COVID-19 pandemic means few people have been left untouched by the uncertainty and hardship suddenly created over the past four weeks.
If you are struggling to make ends meet, cannot pay your rent or utility bills or simply need emotional support, don’t keep it to yourself – make use of the myriad agencies and networks standing by to help vulnerable people during this time.
For confidential financial support, the National Debt Helpline can be reached on 1800 007 007.
For personal support, help with suicidal thoughts and domestic violence, call Lifeline on 13 11 14.
21 FREE TAFE COURSES
Administration skills for team leaders – $1,380.00
Covers skills needed to organise meetings, travel and conference arrangement for the workplace as well as designing business documents.
Business administration skills – $1,170.00
Introductory skills in word processing, electronic scheduling and presentations for a workplace.
Executive assistant organisational skills – $1,490.00
Suited to people who use administrative skills and broad knowledge base in variety of administrative contexts.
Introduction to accounting – $1,030.00
For people who wish to learn new bookkeeping and accounting skills or enhance their current skills.
Complex word processing and spreadsheets – $1,300.00
Training in office applications at complex levels. Learners will create letters, reports, flyers, budgets, formulas, macros, charts and templates.
Computing skills – $1,570.00
Training in office applications such as word processing and spreadsheets. The course will show you how to create letters, reports, flyers, budgets, formulas, macros, charts and templates.
eMarketing for small business – $800.00
Skills to use social media to build a basic website to interact with customers and promote products and services.
Engaging customers using social media – $350.00
Develop skills to use social media platforms to interact with customers and promote products and services.
Excel spreadsheets – $1,220.00
This short course enables learners to become proficient in the creation and use of spreadsheet functions. This statement is suitable for those interested in gaining the skills and knowledge to perform calculations by using formulas, functions, templates and charts.
Websites for small business – $530.00
Develop skills to build a basic website to interact with customers and promote products and services. These skills can be applied across a variety of industries.
Medical administration skills – $1,250.00
Medical terminology, confidentiality and privacy, and develop skills to produce digital documents. Suitable for those working in medical administration or thinking of making a move into this area.
S2/S3 pharmacy training – $180.00
This course provides the skills and knowledge required to meet the Pharmacy Guild of Australia’s Quality Care Pharmacy Program (QCPP) requirements for all staff who directly supply Pharmacy Medicines (S2) or assist the pharmacist with the supply of Pharmacist-Only Medicines (S3).
Executive skills – $840.00
This course is suitable for those working in various administration and clerical roles, and is a career pathway into a team leader role. Learn how to facilitate meetings, manage an electronic calendar and negotiate meeting arrangements.
Team leader skill set – $1,460.00
Develop skills as a team leader and communicate effectively, ensure team performance, develop effective relationships in the workplace and implement operational plans.
Computer applications – $1,030.00
For experienced ICT users wanting to take their knowledge to the next level. Learn how to manipulate data and access support resources to solve issues across a range of different software applications.
Digital literacy skills set – $500.00
This skill set is for persons wanting to gain digital literacy skills in the use of a personal computer, software applications and digital devices. This skill set has been designed for individuals who wish to meet competency requirements for a broad range of digital literacy skills including the use of basic computing, web searching and basic applications software.
Introduction to word processing and spreadsheets – $1,250.00
This course provides training in the use of office applications in word processing and spreadsheet software at a beginner level. Learners will learn correct keyboarding techniques to create a range of workplace documents which may include letters, reports, flyers, budgets, basic formulas and charts.
Introductory business skills – $1,140.00
This course provides the underpinning skills and knowledge of customer services techniques, work health and safety awareness and intermediate word processing skills for the workplace.
Writing and presentation skills – $1,570.00
How to create and deliver dynamic workplace presentations and write complex business documents.
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