There is considerably more candour in this article than the entirety of the NZ media.
How to survive a recession: Expert tips for your finances
We are now officially in the midst of a recession for the first time in almost 30 years. Here’s how to ride out the tough months ahead.
4 June, 2020
It’s official: Australia is heading into recession. The news wasn’t unexpected given the devastating impact of the Covid-19 pandemic on the economy. But there could be more bad news on the way.
Australia’s decades-long run of prosperity has come to an end, with the nation entering an official recession for the first time since the 1990s.
The grim news was confirmed yesterday by Treasurer Josh Frydenberg, after it was revealed coronavirus-fuelled panic buying had failed to save us.
Instead, the Australian economy shrunk by 0.3 per cent over the first three months of the year – the first quarterly contraction since 2011.
As if that wasn’t bad enough, national accounts figures from the Australian Bureau of Statistics also showed annual GDP growth slowed from 2.2 per cent to 1.4 per cent.
And while the technical definition of a recession is two quarters of negative growth in a row, that’s all but certain to occur in the June quarter, meaning the “R” word is now inescapable.
FEELING THE PINCH
They are worrying statistics, and it’s no surprise that households are feeling the strain, with a recent Finder survey revealing more than one in three Aussies don’t feel financially prepared in the current climate.
The overwhelming majority are worried about a lack of savings, with job security and the plunging Australian dollar also causing concern.
Almost a quarter of us have had to defer bills or payments due to the coronavirus crisis, while we’ve upped our savings by 30 per cent compared to the beginning of 2020.
Finder’s money expert Bessie Hassan said families were tightening their belts as almost all of us had been impacted in some way since the crisis began.
“Regardless of your current situation, it’s important to safeguard your financial position however possible – every bit counts,” Ms Hassan said.
Prime Minister Scott Morrison is hoping the new HomeBuilder stimulus package will soften the blow of a recession. Picture: Mick Tsikas/AAP
RECESSION-PROOF YOUR MONEY
Ms Hassan said many Australians had asked for a rent freeze and applied for benefits such as JobSeeker and JobKeeper – but she warned these measures “won’t last forever”.
Therefore, it’s essential to transfer any spare cash into a buffer account that you can rely on once the Government assistance ends, or your landlord begins charging rent again.
“Make sure you prioritise your buffer account. It’s tempting to go to the pub or eat out now that restrictions are lifting, but recessions can last for a while – you don’t know what might happen down the track,” she said.
That sentiment was echoed by Dominic Beattie, editor of online financial resource Savings.com.au, who told news.com.au people should build up an emergency savings fund that would cover three to six months’ worth of bills if you experience sudden hardship.
And if you do have savings stashed away, make sure you are getting a competitive interest rate.
“Both AMP and Macquarie Bank are offering 2.26 per cent per annum and Rabobank is also offering up to 2.25 per cent per annum,” Ms Hassan said.
Both Ms Hassan and Mr Beattie said as housing was one of the biggest expenses most of us faced, now was the time to look into your options.
“If your lease is due to expire soon, consider moving to a cheaper property. Rental prices have fallen significantly during the pandemic, and you can save a small fortune by relocating. Consider moving into a sharehouse to split the rent even further,” Ms Hassan said.
“If you’re a homeowner, refinancing to a lower interest rate can save you thousands of dollars over the life of your loan by lowering your monthly or fortnightly repayments.
“If you’ve been paying above the minimum repayment amount, you may also have the option to access redraw. This can help to free up cashflow if you’re falling behind on your bills.”
Mr Beattie went a step further, and said Aussies shouldn’t be afraid to downsize, or sell their home and rent temporarily.
Fears mount that
drive Australia’s recession
deep into depression