Where do we stand with our finances since COVID hit?

Money and Life
(Financial Planning Association of Australia)

 

With our new FPA Money & Life Tracker: Covid edition survey, we explored how Australians are going with their finances in 2020. Find out just how many Australians are feeling the effects of COVID on their income, savings and how they’re changing their behaviour as a result. Plus, we share three things you can be doing to stay on top of money matters during this uncertain time.

Everyone in Australia has been affected by the COVID pandemic to some degree. With disruption to our work and social lives, it’s one of the biggest changes many of us have ever faced. But what has it meant for our money and financial wellbeing? To find out, the FPA have introduced our very first Money & Life Tracker Survey: COVID EditionWe’ve asked 2,000 everyday Australians about the money and life issues they’re facing six months into the pandemic. And what they’ve told us shows that people are looking for advice on their finances, now more than ever.

To mark our 2020 Financial Planning Week eventLive Your Today, Plan Your Tomorrow, the FPA are sharing these survey insights. Based on what so many Australians are going through with their finances, we’ve also suggested three things you can be doing to keep your finances healthy as the pandemic continues.

Nearly half of Australians are struggling

Our survey found four in ten Australians have lost income because of COVID-19 and are either struggling to make ends meet (11 per cent) or dipping into savings to get by (31 per cent). So it’s no wonder a quarter of Australians (23 per cent) are experiencing high levels of stress about their financial position, with roughly a third (30 per cent) ‘feeling okay’.

The figures also tell a different story for people making the most of their changed circumstances. A small number (one in 10) said they are in a better position financially as they have been able to save money due to working from home and cancelled holidays. And the majority of people (46 per cent) are still feeling in control of their finances, for the time being. It will be interesting to see if these financial comfort levels change in 2021, as JobKeeper comes to an end and we see the longer term effects of the pandemic on our economy and household incomes.

What were worried about: jobs, savings and super

In spite of the JobKeeper payments supporting businesses to keep employees on the payroll, job insecurity is the number one concern for Australians right now. Women are far more likely to be worried about losing their job (40 per cent compared to 29 per cent for men), and the vast majority of 18-24 year olds (81 per cent) are worried about becoming unemployed.

Having less in savings and loss of super were next in line as the most common financial worries, except for 35-44-year olds. This age group is most worried about paying off their mortgage, a concern that would is also linked to their work prospects and ability to earn an income.   

What we regret: budget basics

For most Australians, the COVID events of 2020 have been a wake-up call for their financial habits and behaviours. With 70 per cent of Australians surveyed saying they could have done better or different to improve their financial position, it seems we’ve learnt an important lesson about being financially prepared for the unexpected. One in five said they could have put cash aside for a rainy day, 17 per cent think they could have controlled impulse buying and 11%  believe they could have focused more on paying down their debt.

The good news is that these ‘regrets’ are helping us reconsider our financial priorities. When asked about changes they’re willing to make post-COVID, our survey respondents ranked “be more frugal about my lifestyle choices” first, followed by “pay down debts” and “create a budget to understand what I’m spending and saving.” 

Three ways to look after your financial future

Acting on these good intentions is certainly going to be important for many Australians, especially those having to manage on less income. If you’re feeling more uncertain about your job, income and financial future because of COVID, here are some simple steps you can take to start a long-term commitment to better financial outcomes:

1. Start a ‘COVID-proof’ plan.

Take this as an opportunity to harness positive financial habits you’ve picked up during COVID. Prepare a list of expenses you don’t need any more and another list of how you could use this money to meet your current needs or look after your future – by saving, investing or paying down debts for example. By keeping a COVID mindset even after COVID is over you can make a lot more progress towards your financial and life goals.

2. Think ahead

Work out where you want to be financially in the future – think five years, 10 years or retirement. Then work backwards for how to get there, along with a timeline of the important milestones you’re looking forward to along the way.

3. Make an appointment with a qualified financial planner

Understanding your current financial situation and short and long-term financial goals – having a financial plan – means you can better manage your finances. Knowing you’re taking care of your immediate expenses, without compromising on saving for the future allows you to live your today, while making sure your tomorrow is planned.

 

 Financial advice makes a difference

The people surveyed who have worked with a financial planner have experienced positive outcomes as a result of their advice. One in five people responding to our survey have have engaged a financial planner and have experienced less impact to their finances compared with others who had not received advice. Almost all of them (87 per cent) did not need to access their super early.

Given the financial benefits of having professional support during a crisis like COVID, it’s interesting to explore just why it is that the other 80 per cent choose not to work with a financial planner. Almost a third think they can ‘do-it-themselves’ with the help of family, friends or online resources. Nearly 20 per cent are holding back because they think they don’t have enough assets or investments to engage a financial planner.

Australians who’ve planned for tomorrow experience greater peace of mind and wellbeing today. They are clearer on what they can spend and save and will sleep peacefully at night knowing that they have someone there to help them understand it all. Financial Planning Week is the perfect time for you to take positive steps toward controlling your financial wellbeing – now and into the future.

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