COVID-19 help: What you must do first with your money

The COVID-19 pandemic has thrown Australia into unprecedented turmoil with many fearing for their financial futures, but experts have offered up advice on what assistance packages you should look at first.

The Government has announced a suite of financial packages for a wide number Australians including - homeowners, sole traders, pensioners, seniors, casual staff and the recently unemployed - to help them survive this crisis.

Here, we cut through the confusion of what is on offer - and what financial measures you should activate first.

 

 

WHAT SHOULD I DO IF I'M A HOMEOWNER?

The big four banks have announced mortgage deferrals of up to six months for those financially impacted by coronavirus.

Tribeca Financial CEO Ryan Watson said the first step for homeowners was to speak with their respective mortgage brokers to discuss what financial relief their bank is offering.

Information is also available on each bank's website.

Homeowners should then look at other areas they can save money, according to Mr Watson, who said finding the best deals on utilities could make a difference.

"I'd really encourage homeowners to look at the 'expense line' within their household budget - to tighten their belts," he said.

"Unless household bills, i.e. gas electricity, insurance, etc. are reviewed often, they can become uncompetitive which means you will be paying too much."

Mr Watson said if putting mortgage repayments on hold didn't offer enough financial relief: "I would encourage them to consider selling the property and relieving themselves of the debt".

"As tough as this sounds, tough decisions made now can make life easier in the new future," he added.

 

Homeowners need to consider a few things.
Homeowners need to consider a few things.

 

Health fund members who have lost their jobs can also apply to have their health fund premiums waived for extended periods, the industry body announced.

And those suffering mental distress and already undergoing psychological treatment will be able to have telehealth consultations with their psychologist covered by their health fund if their policy covers psychological services.

"Health fund members who have been severely impacted by job loss or underemployment as a result of the COVID-19 pandemic are urged to contact their fund directly as they may be eligible to have their premium waived for an extended period. Health funds are currently putting programs in place to provide support for members," Private Healthcare Australia chief Dr Rachel David said.

"The primary focus of health funds is to meet the needs of the community and members in these challenging and uncertain times and offering financial support by way of premium waivers is an important first step.

The majority of health funds have agreed to provide coverage for teleconsultations provided by psychologists from Monday 30 March, to help ease the financial burden and keep people healthy, subject to the conditions listed below.

Initially it might be difficult to ensure benefits are paid quickly as electronic claiming systems (in particular, HICAPS) and some health funds' processes are not set up to deliver benefits for telehealth services. PHA, Australian Psychological Society and individual funds will address the system issues as quickly as possible.

 

Gloves are now a necessity for day to day tasks. Picture: AAP
Gloves are now a necessity for day to day tasks. Picture: AAP

 

With the Australian Psychological Society (APS), private health insurers have agreed to provide benefits for individual (one-on-one) psychology teleconsultations where:

The patient is undergoing an existing course of treatment, and has seen the psychologist providing the teleconsultation over the past six months, or for new patients, the telepsychology service has been recommended by their general practitioner, and the service is delivered before 30 September 2020, and the service is undertaken in accordance with Australian Psychological Society guidelines.

Meanwhile, Australian mortgage holders are among those able to access up to $10,000 in superannuation this financial year if they are impacted by the coronavirus crisis from mid-April, but Mr Watson said this should only be considered "by those people in serious financial stress" such as those who are unemployed, have been made redundant or now have a significant earning capacity reduction.

 

 

WHAT SHOULD I DO IF I'M RECENTLY UNEMPLOYED OR A CASUAL WORKER?

Mr Watson recommended the first port of call for those who had lost their jobs was to use any connections they have to try and secure new employment opportunities.

"Recently unemployed people should look hard within their network to assess who might be able to assist them to get back into the workforce," he said.

"The more conversations that are had, the more chance someone is to open up a job opportunity.

"Failing this, they should apply to the Centrelink Jobseekers program ASAP to ensure they receive some income assistance."

 

Centrelink has experienced long queues since Australian workers have hit tough times in the wake of coronavirus. Picture: Glenn Ferguson
Centrelink has experienced long queues since Australian workers have hit tough times in the wake of coronavirus. Picture: Glenn Ferguson

 

Those who are unemployed can apply for Centrelink's Jobseeker payments, which have also been extended to include casual workers who meet the income test.

From April 27, an additional $550 per fortnight will be paid to current and new recipients during the pandemic, including those on student payments.

Australians can access up to $10,000 from their superannuation fund from mid-April, but must do so by June 30.

If they are still experiencing financial hardship from COVID-19, they can access a further $10,000 in 2020-21 financial year from July 1.

Deciding to access superannuation prematurely will not impact Centrelink payment eligibility as the asset test has been frozen.

For more information, visit: www.servicesaustralia.gov.au.

WHAT SHOULD I DO IF I'M A SENIOR OR PENSIONER?

National Seniors chief advocate Ian Henschke recommended seniors of pensioner age and pensioners look at accessing the Pension Loan Scheme.

The scheme is available to retirees of age pension age, who own Australian property and meet pension eligibility requirements, and allows them supplement their fortnightly pension up to a maximum of 150 per cent.

A couple on a combined fortnightly pension of $1,407 can receive a combined additional payment of up to $703 per fortnight as PLS payment, according to National Seniors.

This, Mr Henschke said, would allow those eligible to make ends meet without taking out additional superannuation.

 

Supermarkets have introduced new rules giving seniors and those who are vulnerable early access to their stores, including this Woolworths in Sydney. Picture: AAP
Supermarkets have introduced new rules giving seniors and those who are vulnerable early access to their stores, including this Woolworths in Sydney. Picture: AAP

 

The interest rate on the scheme was dropped from 5.25 per cent to 4.5 per cent last year, but Mr Henschke said he was fighting to have it lowered even further.

Mr Henschke also recommended seniors and pensioners facing financial adversity try to avoid using credit.

"It would be foolish of people to try to live using their credit card if they're struggling, because we know credit cards are the most expensive finance you can have," he said.

Australians who receive Centrelink payments, including the Age Pension, or are Pensioner Concession Card holders, will automatically receive a $750 Economic Support payment from March 31.

For more information on the Pension Loan Scheme and the Economic Support payment, visit: www.servicesaustralia.gov.au.

 

MORE NEWS

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WHAT SHOULD I DO IF I'M A SOLE TRADER?

Peter Strong, CEO of the Council of Small Business of Australia, said sole traders should first make use of available Centrelink payments.

Centrelink's Jobseeker payment is available for sole traders and self-employed people who have experienced a reduction in income.

After this, Mr Strong said they should sit down and determine how much money they need for the next six months to get by until their business becomes viable again.

"I'd say, okay, what do I need to continue to function as a family? What do I need to continue to put food on the table to do the things that we all need as a basic?," he said.

Mr Strong said sole traders should then take advantage of mortgage payment deferrals currently offered by banks.

He suggested renters ask landlords: "if they've got a holiday from repayments on their loan, then is there any way they can pass that on to you?".

Prime Minister Scott Morrison in Canberra on Sunday, where he announced tough new lockdown measures to stop the spread of COVID-19. Picture Gary Ramage
Prime Minister Scott Morrison in Canberra on Sunday, where he announced tough new lockdown measures to stop the spread of COVID-19. Picture Gary Ramage

Sole traders should also look to remodelling their business or offering an online service online if possible, said Mr Strong, as well as connecting with other sole traders.

"If you've got a network of other business operators, a lot of sole traders do, they might be contacting them and talking to them," he said.

"If there's work around, you might want to share it around."

Sole traders who have experienced a 20 per cent or more reduction in turnover, or had their business suspended after January 1 are eligible to draw $10,000 from their superannuation funds from mid-April, but must do so by June 30.

If they are still experiencing financial hardship from COVID-19, they can access a further $10,000 in 2020-21 financial year from July 1.

Mr Strong said for those who really needed the extra money, it was something to consider, but noted many sole traders don't pay themselves super.

For more information, visit: www.servicesaustralia.gov.au.

 

 

Originally published as COVID-19 help: What you must do first with your money


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