We have all struggled with money at some stage of our lives, the financially savvy of us are few and far between. Not to mention the conversation around money is often shrouded in judgment. Learning about finance can often be confusing, intimidating and feel like you need an accounting degree to understand the in's and out's.
To blow this topic open Noisin.co would like to introduce Money Talks, a segment dictated to educating the non-financial savvy of us on personal finance and making smart money choices. After all, money makes the world go round.
Enter Garrath Tonkin, our new Money Talks writer, he will be leading the way in financial talk and tasked with making our reader financial wizards. Tonkin has worked in retail sales and commercial strategy for the majority of his career and has gone through the challenging process of making money fit into his own daily life. He has a wealth of knowledge on owning one's financial situation and how to plan, use and action money in everyday life to make it work for the positive.
Disclaimer: The advice given is opinion based and general knowledge, we are by no means offering perfect solutions to financial issues or struggles. Everyone's situation is unique and please take your own actions and options into consideration before following any information published by Noisin.co. You should see a qualified financial advisor for individual advice if needed.
Take it away Garrath
Is probably what most of you have been saying, or some variation of this phrase, as we’ve collectively watched in shock as the COVID-19 pandemic has unravelled across the world. Alongside the devastating health impacts, it has also created seismic shifts in financial markets and brought entire industries to their knees.
In mere weeks it has added more than 33 million Americans to the unemployment records, and Australia has seen the largest fall in citizens employed in paid work in recorded history, with more than 650,000 dropping out of the workforce in one month alone. The ‘holy shit’ is real.
With all the doom and gloom flying around the media you might feel like your whole world is about to go up in flames. But before you hit the mass panic button I have a few golden tips to take stock of your financial situation and allow you to weather this unprecedented period.
Hopefully your employment is still secure, or you have work still coming at you if you’re freelancing or run your own business. If this is you, then fantastic, but don’t panic if you’re one of the unfortunate many who have lost their jobs, been forced to take a pay cut or reduced hours, or own a business in markets that have vanished almost entirely. The advice I’m about to deliver could help anyone.
Here are 4 steps to take for financial survival. Here we go.
There is always opportunity, even with in crisis, to deal with costs with a laser like focus. With large drops in employment, and international visitors and students retreating, house and unit rental rates are dropping fast across almost all regions in capital cities, so large rent reductions are on offer. Jump online and a quick search in your area will get you up to speed with your current market.
You might be surprised to find you could secure a significant rent reduction. For those paying off your own home, call your bank and negotiate rates. List out all your expenses, line by line, and start evaluating whether you still need 5 different streaming subscriptions right now, especially if you don’t watch them much.
Most financial planners would tell you to have 3-6 months of emergency cash stashed away to survive losing your job, the washing machine blowing up, or other genuine emergencies. This is often called your holy shit fund. Your next trip to Europe (when borders reopen) is not considered an emergency. This should be in a high interest savings account, preferably separate to your main bank so it’s as difficult as possible to access. Keep it out of sight as best as you can. Create an automatic payment schedule so you don’t even have to think about it.
This applies across the board, you should go into protect mode. It's best to ride out financial firestorms like these by sheltering and letting the worst pass over you. General things to aid in this is setting a defined portion of spending based on your income (say 80%), and saving the rest.
It’s probably tempting for some to try and buy some ‘bargains’ in the stock market, but when the most famous and notable investor in the world (Warren Buffet) is sitting on USD$137 billion stockpile of cash, and tells would be followers in his highly anticipated updates that he sees nothing worth buying at current valuations, we should all be listening intently.
It may seem shocking and involve swallowing some pride, but you can reach out to relevant federal and state governments for support. Depending on where you are in the world will dictate what financial aid or other options are available. Beyond federal and state level research deeper into support, go as far as seeking advice from your local city and town council as well. The worst you will hear is no, however you might be pleasantly supplied what’s on offer.
This pandemic will pass, as all things do in the end, and by putting in practice the four steps above you’ll put yourself in a better financial position than most. Then you can be well placed to seize the opportunities that will eventually surface after the dust settles.