COVID-19 & You: What to do during times of financial uncertainty
Posted June 2020
Worried about money? Follow these 6 steps *right now* to ease the pressure…
It’s safe to say we all have money on our minds at the moment.
COVID-19 and the sudden economic shutdown caught a lot of Kiwis off-guard.
The situation is still changing daily. It can feel a little unpredictable. But rest assured, there is a ‘the other side’ to all this. The question is, how do you best manage your money in the meantime?
Spending wisely now will ensure you are able to get back on your feet that much quicker. That’s why today we’re sharing some of the best ways to keep on top of your finances during these difficult times.
This includes:
- Hold on to your savings where possible
- Keep your KiwiSaver (and ignore the balance)
- Watch out for potential scams
- Talk to a professional when considering a mortgage holiday
- Make use of these Government support where possible
- Seek professional financial advice
Deep breath, let’s get started...
1. Hold on to your savings if possible
It’s ok to dip into your savings if you need to.
After all, that money is stashed away for a rainy day...and that day is well and truly here.
However, before you do, just check-in and ask yourself if it’s really necessary. Financial emergencies are a marathon, not a sprint. So are you spending it on something you really need? Or is it better left for later? Your savings will help you get back on your feet.
2. Keep your KiwiSaver (and ignore the balance)
KiwiSaver is a long-term investment in your future.
Like most investments, it will have its good and bad days.
Right now the world is facing a dramatic economic downturn, which will affect your KiwiSaver balance. It can be tempting to withdraw it now to cover expenses or hold on to the gains you’ve already made.
So, what should you do?
You can withdraw your KiwiSaver in times of financial hardship. However, your balance will not be as healthy as it could be. The best thing you can do right now is to take a break from checking your balance and weather the recession.
Weigh up your options and seek government help first before withdrawing KiwiSaver funds.
3. Watch out for potential scams
Sadly, there are people out there who will use a financial emergency for their own gain.
COVID-19 isn’t the first time this has happened, and it won’t be the last. Anyone can fall victim to a scam. Especially at times of great stress. So stay vigilant to protect your finances from scams. Here’s what you need to look out for during COVID-19:
- Cold calls with investment offers and other things that sound too good to be true.
- Calls from fraudsters claiming to be health officials who need payment for test results. Don’t give your personal information or credit card details to anyone.
- Email offers of a ‘coronavirus map’ app that claims to track the pandemic. This will download malicious software to your device.
- Emails or texts with links claiming to offer pandemic information. The links will download malicious software to your device and enable fraudsters to access your sensitive information, including passwords and bank details.
The tell-tale signs of a scam include:
- Phone calls out of the blue.
- Being asked for account details/passwords (banks will never ask for your password).
- Requesting remote access to your device.
- Being pressured to make quick decisions.
If it doesn’t feel right, chances are it’s a scam.
Be careful.
4. Talk to a professional when considering a mortgage holiday
A mortgage holiday is a great way to free up cash in the short term.
However, we strongly recommend seeking advice before making a decision.
Interest, as well as other fees and charges, still accrue during any grace period, which means your mortgage will be bigger when the holiday ends. A mortgage holiday should be your last resort. If you are able to pay interest-only on your mortgage, you should consider this first.
If you do need to take a mortgage holiday, keep the period as short as possible.
5. Make use of Government support where possible
The government’s economic response to COVID-19 has cushioned the blow, particularly for business owners who need to pay staff while they’re making a loss or unable to operate. From the wage subsidy for business owners to help for individuals, there are several ways to get financial help during COVID-19.
There is no shame in seeking help.
If you need it, help is available.
For more information visit: https://www.unitymoney.co.nz/about-us/covid-19-how-we-can-help/
6. Seek professional financial advice
When disaster strikes, fear is the most common emotion. Panic often means we scramble for things we wouldn’t usually care too much about - remember the toilet paper shortage? - and our ability to make sound decisions suffers.
The financial decisions we make now could have major consequences in the long term. That’s why it’s best to get in touch with your financial provider and discuss your options with them. You’ll be surprised at just how many options you do have available to you.
We’re by your side
Throughout these difficult financial times, we remain committed to helping New Zealanders live their best financial lives. We can help you make the right decisions for you, your family, and your finances. Get in touch with our team online or over the phone for lending services, general inquiries, or any questions you may have.
Don’t hesitate to contact us, we’re here to help.