Live on a JobKeeper budget

page 41

JOBKEEPER BUDGET MANAGEABLE

Between March 14 and April 18, the ABS says the number of available jobs across the nation decreased 7.5% while total wages paid by employers decreased 8.2%. Industries that lost the most jobs in that time were accommodation and food services (down 33.4%), followed by the arts and recreation (27%).

Undoubtedly, these workers would have been among the 587,600 (as at May 6) who applied for the JobSeeker payment of $550 a week and among the 850,000 employers that applied for the $670 (after tax) JobKeeper payment.

The good news is that if your only source of income over the next four months is JobSeeker or JobKeeper (they last until September), then there are ways to successfully manage your budget.

Tristan Scifo, financial adviser at Purpose Advisory, says his dad – a taxi driver aged 76 – is likely to be receiving the JobKeeper payment for six months and they’ve already had discussions about how to manage the income. After tax he’ll receive more than $17,000 over six months, and it presents an opportunity to save money for whatever might come his way.

Let’s say Tristan’s dad splits his fortnightly JobKeeper payment ($1340 after tax) into three buckets: rent ($600), savings ($370) and everyday expenses ($370). Over six months he could potentially save more than $4800. What’s not factored into this budget is the age pension or other Centrelink payments. If you receive the JobKeeper payment, you must report it as part of your income to Centrelink.

Helen Baker, financial adviser at On Your Own Two Feet, says $1340 is tough to live off every fortnight but it’s workable provided you make the necessary calls to your bank, landlord, insurer and utility provider to reduce or defer payments.

She’s created a budget guide for individuals on both the JobSeeker and JobKeeper payments (see tables), but this relies on you negotiating lower rent or deferring your mortgage payments or other debt payments.

“Those who use this guide will also need to almost eliminate non-essential spending,” says Baker. “The budget caters for a healthy, single person without large ongoing expenses or in need of ongoing medical support.”

Financial experts agree you can live off these funds and manage your finances until you return to earning your regular income. Otherwise, it’s not necessarily sustainable in the longer term as you’re likely to want to return to your previous lifestyle.

Harry Goldberg, financial adviser at Purpose Advisory, says Australia is in a fortunate position to have its federal government willing to provide a solid social security system and increased financial support during the pandemic. However, he says relying on the government or family and friends to get you through the next crisis really shouldn’t be your preferred method of survival.

Finn Kelly says if your employment was intact before Covid-19 but you’re now a recipient of either JobSeeker or JobKeeper, there are a few questions you should ask yourself before revising a budget.

After you’ve established your essential needs, you must ask whether your income (including JobSeeker or JobKeeper) will cover you for the weeks and months ahead. If so, great, but if it doesn’t then you need to ask “How long is it until I’m in trouble?”

BUDGET TO INVEST

A lot of the time financial disasters occur when you don’t have money accessible for an emergency right there and then, says Kelly. On the flip side, he’s seen people with the smallest pay cheque manage to have savings accounts because they use the right proportions with their expenses.

He says it’s okay to use your savings when times are tough, but it should be for your needs only. Depending on how much you’ve saved, you could potentially pay for something that’s nice to have and not necessarily needed at this time. But there’s a strong caveat: you would need a decent forecast of when you’re going to earn money again. And there’s no way you should be paying for luxuries right now.

“You’re literally sabotaging yourself if you’re using any money on luxuries at this point. It’s almost selfish and self-entitled as well because eventually you’re going to be in need of someone else’s financial help, whether it’s the government, a friend or family,” says Kelly.

He and other experts share a view that if there’s any room to save money right now, this is the time to be doing it.

“I know there are a lot of people with their incomes going down, but there’s also a lot of people with an opportunity to cut their expenses and build that emergency account or that ‘get out of jail’ account,” says Kelly. “If you are lucky enough to have work right now, I’d be cutting heavily from your expenditure just in case and create a buffer so you have levers to move if things worsen or go wrong.”

He says it’s important to keep in mind that after September there are likely to be fewer government benefits available.

Tristan Scifo says once you’ve worked out your non-negotiable essentials, whatever remains in your budget should be split – pay yourself first and then have something left to invest for your future. Typically about 20% of your income is put away for long-term savings, but when tougher times hit this may not be achievable and you can lower the percentage.

To make sure you don’t break your budget rules or tap into your savings, different accounts with different banks can make this work. You could even invest with micro-investing or robo-investing platforms such as Raiz, Spaceship, Stockspot and Six Park.

Let’s say you have $300 left over from your budget - $100 could be transferred into a savings buffer or emergency fund, $100 into a longer-term investment (not super), then $100 into super. Nobby Kleinman says even if you put $50 of your salary every week into super, you’ll adjust your lifestyle according to what’s left and you’ll be thankful in retirement.

“Everyone should be investing, regardless of your

situation. It’s a powerful act to invest. It feels like you’re now taking action to achieve your vision,” says Kelly. “This is different from savings. Savings are great but the problem is they’re too accessible and we naturally have a limiting belief on what’s big or great when it comes to savings – for someone it might be $5000, for someone else it might be $100,000.

“And when you hit your savings cap you won’t save any more. It’s why people carry a certain amount of credit card debt as well. They get comfortable thinking that $10,000 in debt is okay and even when they’re earning five times more they’re still okay with it.”