How to make the best financial decisions in time of crisis

What we need to think about is that whilst we’re going through a lot of financial pain at the moment, it’s going to be a long road, ultimately the decisions that you make today could potentially affect your financial wellbeing for years to come. Just make sure that you make well informed, well thought out decisions, and seek out advice where appropriate.

A bit of background with the government stimulus package. The stimulus currently measures a total of $320 billion.

That’s from the government, from local states, and the RBA as well. It’s the largest stimulus package in history. Just for a bit of context, during the GFC (Global Financial Crisis) which is probably the last big financial downturn that most people remember, the government stimulus package was $52.4 billion.

This is around about six times the size of that stimulus package.

So, let’s look at what payments are available, how can you get them and what should you be doing right now.

Payments that are available:

There’s a lot of information out there, so we’re going to try and break it down into each section and break it down further into what you currently have to do.

Just make sure that you start doing something now and if you need any help, do reach out.

The first thing that the government did is they came out and said that there would be a payment to support households, this is made up of two payments of $750.

The first payment was going to be made from the 31st of March and the second payment was going to be made from the 13th of July, 2020.

People that are eligible for the first payment must already be in receipt of an income payment from the government. So, things like an age pension, disability support pension, family tax benefit. It can also be l concession card holders or Commonwealth senior card holders. There’s a really long list of people that are already getting income support from the government that it’s going to apply to.

The second $750 payment from the 13th of July is a little bit different. It’s going to depend on what other payments you’re receiving and how much income you’ve currently received as to whether you get the second one.

They haven’t really released too many details around that yet, so we’re still waiting, okay? These payments are automatic. You don’t need to apply for them.

If you are eligible for one of the payments or concessional cards from the 12th of March 2020, then you’re going to be eligible for this payment.

One of the first payments the Governments announced was the Jobseeker Payment (previously Newstart) you can access our jobseeker article here to learn more about it.

Then the government announced the JobKeeper payment which more people could be eligible for particularly New Zealand citizens who call Australia home but have been here less than 10 years. You can read our article on the JobKeeper payment here.

No matter which payment you receive it is important to know that you are paid before tax is taken out so either you’re going to have to put something aside, or you’re going to have to start a payment plan further down the line.

This is what we’re talking about when we say decisions that you’re making today could have far reaching effects. Yes, think about today, if you need the money, absolutely we understand, everybody’s struggling. But just remember to try to plan and think about what the potential liabilities are going to be that you are going to have further down the line.

Another proposal the government announced was that you could get early access to your Superannuation. This is a pretty big one, it isn’t as black and white as it suggests. So, we are going to walk you through it. You can read our article on it here or you can watch our YouTube video here

Accessing your Superannuation should be your last resort, if you can’t get anything else and you are not going to be able to survive for the next month, two months, three months and even then, you should seek advice on it.

How to apply for the payments:

You will need to log into MyGov. If you don’t have a MyGov account already you will need to set up a Customer Reference Number (CRN) so this will mean a call to Centrelink as you will need to be identified. If you are in Perth call in the afternoon as that is when the eastern state calls drop off.

They have made it a lot easier for people, because obviously they understand that especially while we’re all isolated, people can’t go into Centrelink. Make sure that you’ve got up-to-date ID and you know what you want. Go on, register your intention to claim, when they give you a call, you’re going to be able to go through everything there and then.

Once you sign in to MyGov you will see a box that says ‘Intention to access coronavirus support’. If your circumstances are affected by coronavirus, you can register for either an intention to claim a payment with Centrelink (Jobseeker) or an interest in early access to your super with the Australian Tax Office. Click continue, you can then register your intent to claim, for Jobseeker at the top, or register your interest in early access to superannuation.

What we would say to everyone is if you’re thinking about doing these, jump on and do them now. You can always say no once they give you a call or they get in touch, if your circumstances change. But you want to get on there and do it now.

You want to register your intention to claim for Jobseeker if you feel that you’re eligible and you need to go through it, as soon as possible, because they will backdate your payments.

Like we said, some of these payments may not be available until the end of April, so it’s still going to be quite some time until you get paid, but the sooner you register your intent, the more of a backdate payment that you can get when that payment comes through. We would say jump on, register your intention to claim. All you do is you click that button, you confirm a few of your details and then Centrelink will get in touch with you.

If you are in absolute dire straits, you’re on your last penny and you have no idea what’s going to be happening next week or you can’t afford food, then please, please, please give Centrelink a call. Get in touch with them now, don’t wait. But if you can wait, the best thing to do is click that register intention to claim and go through there.

You can also register your interest in early access to your super. The ATO will be in touch. This can’t be done anyway until April 20, but if you get yourself on there, get yourself on the list, they’ll be in touch and they’ll run you through the process of what you need to do. We currently don’t know what the process is. We don’t know how superannuation funds are going to find the cash to pay this out. There’s a lot of things still up in the air, but like we said, register your intent or your interest, and then at least you’re on the list and they’ll get in touch with you for when all that can actually happen.

This isn’t the only thing that you can be doing. While these payments are going to make a big difference to a lot of people, there are a lot of other pieces of help out there, and a lot of other institutions that are doing things to be able to help their clients, and this is what we think right now, you should be taking a big, big interest in. Get on the front foot and call them, don’t wait until they come knocking on your door.

If you’re struggling to make repayments on credit cards, on personal loans, on car loans, on home loans, get in touch with those institutions, explain your situation, and see what they can do for you. You can read our article here about 5 things to reduce your financial stress during COVID-19.

Everybody’s in the same boat. Everyone understands where this is coming from, so people need to help and they really, really are trying to help. That’s our advice, is to get on that front foot, get in touch with your banks, get in touch with anyone else that you’re paying money to, utility providers, and go from there. You can read our Debt article (insert clever name) here

To recap:

If you are under financial stress or expect to be soon:

  • See if you are eligible for the Jobseeker payment and apply through MyGov
  • Talk to your employer about the Jobkeeper payment if you are a full time, part time or have been employed as a casual for over 12 months (remember you can’t get both)
  • If you think you have no other option and want to access your Superannuation seek advice first.

This is important to keep in mind:

  • The payments you receive will be pre-tax dollars so you need to put aside tax because otherwise at the end of the financial year you will be owing money.
  • If you receive the Jobseeker payment, you’re still expected to be open and available for work, and so it’s not just a payment because you’re not currently working. If there are jobs that come up, they will potentially expect you to go for them. We don’t know how this is going to work. That’s just the wording that they’ve put out. But usually when you’re on a Newstart or a Jobseeker payment, you’re expected to be looking for work and they’ll continue paying you as long as you can provide evidence that you’ve been looking for work and you just haven’t found any.
  •  You’re also going to potentially not have to prove a lot upfront, because they just don’t have the resources to get you to prove whether or not you’ve lost your job or you’ve been stood down, or especially as a sole trader, your revenue has been reduced by more than 20-30%. But once this all is finished and we’re through everything, they will look back retrospectively at what you said, what your declaration was, and they will then ask for evidence. If you can’t show the evidence, they will ask you to pay the money back.

This is why we’re saying to make sure the decisions that you’re making now, are well informed and well intentioned. Make sure you seek out advice and make sure they’re the correct decisions going forward.

We’ve had a lot of people ask:

 “I’m still working, but my hours reduced a little bit, and my partner’s still in full time work, but can I claim for this and get the money?”

That’s not what it’s really there for. It’s there for people that have been stood down or had their hours drastically reduced, and currently can’t afford to live.

Like we said, there’s a lot of eligibility criteria, there’s a lot of things to go through, but MyGov, the ATO, every treasury link that we’ve got in here all link to the fact sheets as well, that the government’s produced. They’re all pretty easy to run through and understand.

At the end of the day, just put your intention or your interest to claim and when they give you a call, just run through your scenario with them, and they’ll be able to tell you there and then, yes or no. There’s no harm in putting that intent to claim in there. That’s what we would be saying to do.

Watch our YouTube video on Super In our YouTube video Early Release of Super we talk about how the withdrawal of $20,000 will impact your super fund and why we think that you shouldn’t do it.

We are always working on getting you the most up to date information so please follow us on Facebook, Instagram, and LinkedIn. If you have any questions you can jump into our contact page here to send us any queries you have.

Make sure you get onto the front foot and jump onto MyGov, register your intent to claim, talk to your employer, talk to everyone that you owe money to, start having conversations with them, and really start to dig into what you can do.

There is a lot of help out there and a lot of people are there and willing to help. We’re all in this together.

And remember – Stay Home and Stay Safe.