Here’s how to prepare yourself financially if you’re facing an extended period of time without pay, a pay cut, or even unemployment.

We may be flattening the infection curve, but job losses are still rising as many businesses struggle to survive in this new COVID-19 world.

With a recession looming, unemployment could rise to 15% according to the Grattan Institute - the highest unemployment figure since the Great Depression.

Anecdotally, I’ve heard many stories of people in my personal life who have had to take significant pay cuts or are facing the possibility of having to take leave without pay as their company tries to keep its head above water.

Check your spending

Regularly reviewing your spending habits is something you should always be doing, worldwide pandemic or not. But in these uncertain economic times, it’s even more important to get your spending under control - particularly if you’re facing the possibility of unemployment or have recently taken a pay cut.

If you’re now working from home, you’re probably spending less money on transportation to and from work but you might be spending more money online shopping or on takeaway food while you’re stuck in iso. Take a look at what you’re spending on and see if there are any areas where you can cut back.

It’s always a good idea to check your bank statements and see if you have any recurring payments coming out for services that you’ve forgotten to cancel.

Set up an emergency fund

If you haven’t already got an emergency fund, this is the time to make one.

Ideally, an emergency fund should have enough to cover between three to six months' worth of expenses because this is usually how long it takes most people to find a new job, according to Seek.

You should take a look at how much money you would need to cover your rent, bills, groceries and other essential expenses if you were to lose your job or take a big pay cut. What this will look like will be different for everyone. For some people, a few thousand dollars may be enough to happily survive on, but others may need a far bigger amount to feel comfortable with.

For those who already have an emergency fund, you may want to continue topping it up while you have income coming in so there’s plenty to cover you if your situation suddenly changes.

Maximise your savings

Interest rates on savings accounts are pretty low at the moment, thanks to all the recent rate cuts, but there are still some savings accounts on the market with decent rates if you look hard enough.

Need somewhere to store cash and earn interest? The table below features introductory savings accounts with some of the highest interest rates on the market.

Provider

4000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]
More details
  • Bonus rate for the first 4 months from account opening
  • No account keeping fees
  • No minimum balance

High Interest Savings Account (< $250k)

  • Bonus rate for the first 4 months from account opening
  • No account keeping fees
  • No minimum balance
010000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]
More details
  • Earn up to 5.40% pa by depositing $1,000 in the previous month
  • No account fees
  • Easy access to your money

Saver Account (<$250k)

  • Earn up to 5.40% pa by depositing $1,000 in the previous month
  • No account fees
  • Easy access to your money
4000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]
More details
  • A high-interest online savings account with no monthly fees, easy withdrawals and award-winning digital banking
  • No withdrawal notice periods or interest rate penalties

Savings Account (Amounts < $250k)

  • A high-interest online savings account with no monthly fees, easy withdrawals and award-winning digital banking
  • No withdrawal notice periods or interest rate penalties
4000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]
More details
  • For deposit amounts $0 - $49,999
  • New ING personal savings customers receive an introductory bonus 0.50% p.a. variable kick starter rate for the first 4 months on balances up to $500,000.
  • Reverts to variable ongoing rate. T&Cs apply.

Savings Accelerator (Amounts < $50000)

  • For deposit amounts $0 - $49,999
  • New ING personal savings customers receive an introductory bonus 0.50% p.a. variable kick starter rate for the first 4 months on balances up to $500,000.
  • Reverts to variable ongoing rate. T&Cs apply.
010000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]
More details
  • Deposit at least $1,000+ each month from an external source
  • Make 5 or more eligible transactions
  • Grow your savings balance each month

Savings Maximiser (<$100k)

  • Deposit at least $1,000+ each month from an external source
  • Make 5 or more eligible transactions
  • Grow your savings balance each month
02000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]
More details
No monthly fees
  • Download the App to open your account
  • Get better visibility of your spending within App!
  • Deposit $200 per month to activate bonus interest
No monthly fees

Save Account

  • Download the App to open your account
  • Get better visibility of your spending within App!
  • Deposit $200 per month to activate bonus interest
020000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]
More details

HomeME Savings Account ($0 - $100,000)

    02001$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]
    More details

    Growth Saver ($1 - $25k)

      010000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]
      More details
      For customers aged 14-35 years
      For customers aged 14-35 years

      Future Saver Account ( < $50k)

        05001$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]
        More details
        • Maximum Age - 24

        Goal Saver

        • Maximum Age - 24
        010000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]
        More details

        Boost Saver

          00.011$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]
          More details

          Reward Saver Account (31 years +) ($0-$100k)

            01000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]
            More details

            Bonus Saver Account (Amounts < $100k)

              0201$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]
              More details

              Reward Saver Kick Start (Amounts ≤ $1m)

                00.010$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]
                More details

                Life (< 30 years) (Monthly deposit)

                  5000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]
                  More details

                  NetBank Saver

                    000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]
                    More details

                    ANZ Save

                      050$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]
                      More details

                      Young Saver Account

                        0501$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]
                        More details

                        Save up

                          02000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]
                          More details

                          Bonus Saver (<$1 Million)

                            Important Information and Comparison Rate Warning

                            All products with a link to a product provider’s website have a commercial marketing relationship between us and these providers. These products may appear prominently and first within the search tables regardless of their attributes and may include products marked as promoted, featured or sponsored. The link to a product provider’s website will allow you to get more information or apply for the product. By de-selecting “Show online partners only” additional non-commercialised products may be displayed and re-sorted at the top of the table. For more information on how we’ve selected these “Sponsored”, “Featured” and “Promoted” products, the products we compare, how we make money, and other important information about our service, please click here. Rates correct as of June 16, 2024. View disclaimer.

                            Alternatively, fixed interest rates on some term deposits are actually going up in response to the coronavirus crisis and the economic shockwave that has followed.

                            This presents an opportunity for savers to lock away their money at a decent rate for a period of at least six months.

                            Want to earn a fixed interest rate on your cash? The table below features term deposits with some of the highest interest rates on the market for a six-month term.  

                            Provider

                            Annually, At Maturity$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]50007$product[$field["value"]]$product[$field["value"]]
                            More details
                            • Interest calculated daily and paid at end of term
                            • Monthly interest available for terms over 12 months
                            • For deposit amounts $5,000 - $2,000,000

                            Term Deposit - 6 Months

                            • Interest calculated daily and paid at end of term
                            • Monthly interest available for terms over 12 months
                            • For deposit amounts $5,000 - $2,000,000
                            At Maturity, Annually$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]5000$product[$field["value"]]$product[$field["value"]]
                            More details
                            • Guaranteed rate of return
                            • Manage your term deposit online
                            • Choose your own term - Options range from one month to five years

                            Term Deposit - 6 months

                            • Guaranteed rate of return
                            • Manage your term deposit online
                            • Choose your own term - Options range from one month to five years
                            At Maturity, Monthly$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]2500031$product[$field["value"]]$product[$field["value"]]
                            More details

                            Term Deposit - 6 months

                              Annually, At Maturity$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]100031$product[$field["value"]]$product[$field["value"]]
                              More details

                              Term Deposit ($1000-$500001) - 6 months

                                At Maturity$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]10008$product[$field["value"]]$product[$field["value"]]
                                More details

                                Online Term Deposit - 6 months

                                  At Maturity$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]100031$product[$field["value"]]$product[$field["value"]]
                                  More details
                                  • Deposits are protected up to a limit of $250,000 for each account
                                  • Added loyalty bonus of 0.10%

                                  Personal Term Deposit - 6 months

                                  • Deposits are protected up to a limit of $250,000 for each account
                                  • Added loyalty bonus of 0.10%
                                  At Maturity, Annually$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]2500031$product[$field["value"]]$product[$field["value"]]
                                  More details

                                  Term Deposit ($25k-$5m) - 6 months

                                    At Maturity$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]100000$product[$field["value"]]$product[$field["value"]]
                                    More details

                                    Term Investment ($100k-$200k) - 6 months

                                      At Maturity$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]50031$product[$field["value"]]$product[$field["value"]]
                                      More details

                                      Term Deposit ($500 - $1mn) - 6 months

                                        Annually, Semi-Annually, At Maturity, Monthly$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]5000$product[$field["value"]]$product[$field["value"]]
                                        More details

                                        Term Deposit - 6 months

                                          At Maturity, Annually$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]500031$product[$field["value"]]$product[$field["value"]]
                                          More details

                                          Term Deposit ($5k-$25k) - 6 months

                                            Annually, At Maturity$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]100031$product[$field["value"]]$product[$field["value"]]
                                            More details

                                            Term Deposit ($1000+) - 6 months

                                              At Maturity$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]5000$product[$field["value"]]$product[$field["value"]]
                                              More details

                                              Term Investment ($5k-$25k) - 6 months

                                                At Maturity$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]500031$product[$field["value"]]$product[$field["value"]]
                                                More details

                                                Term Deposit ($5k-$500k) - 6 months

                                                  Annually, At Maturity$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]25000031$product[$field["value"]]$product[$field["value"]]
                                                  More details

                                                  Term Deposit ($250k+) - 6 Months

                                                    Annually, At Maturity$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]500031$product[$field["value"]]$product[$field["value"]]
                                                    More details

                                                    Term Deposit ($5000-$999999) - 6 months

                                                      Annually, At Maturity$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]100031$product[$field["value"]]$product[$field["value"]]
                                                      More details

                                                      Term Deposit (> $1000) - 6 months

                                                        At Maturity, Annually$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]500031$product[$field["value"]]$product[$field["value"]]
                                                        More details

                                                        TDs Premier Investment ($5k - $250k) - 6 months

                                                          At Maturity, Annually$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]100031$product[$field["value"]]$product[$field["value"]]
                                                          More details

                                                          Term Deposit ($1000+) - 6 months

                                                            At Maturity$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]500031$product[$field["value"]]$product[$field["value"]]
                                                            More details

                                                            Term Deposit - 6 months

                                                              Important Information and Comparison Rate Warning

                                                              All products with a link to a product provider’s website have a commercial marketing relationship between us and these providers. These products may appear prominently and first within the search tables regardless of their attributes and may include products marked as promoted, featured or sponsored. The link to a product provider’s website will allow you to get more information or apply for the product. By de-selecting “Show online partners only” additional non-commercialised products may be displayed and re-sorted at the top of the table. For more information on how we’ve selected these “Sponsored”, “Featured” and “Promoted” products, the products we compare, how we make money, and other important information about our service, please click here. Rates correct as of June 16, 2024. View disclaimer.

                                                              Read: Banks which are offering special term deposit rates during coronavirus

                                                              Refinance your home loan

                                                              Haven’t given your home loan much thought since you initially took it out? It’s time to change that.

                                                              If your home loan interest rate doesn’t start with a 2 or a 3, get on the phone to your bank and ask for a better rate. If they’re not willing to budge, start comparing home loans to see what better deals are out there that you’re potentially missing out on.

                                                              To demonstrate how much money you could save by switching to a cheaper rate, let’s take a look at someone with a $400,000 home loan with a 30-year term making principal and interest (P&I) repayments.

                                                              After two years of being on a 4.00% p.a. interest rate, the interest rate was dropped to 3.50% p.a. and the minimum monthly repayment amount dropped accordingly.

                                                              Interest rate

                                                              Monthly repayments

                                                              Monthly repayment reduction (from 4.00% p.a.)

                                                              4.00% p.a.

                                                              $1,910

                                                              N/A

                                                              3.50% p.a. (after two years of paying 4.00% p.a.)

                                                              $1,802

                                                              $108

                                                              This amounts to a saving of $108 per month which may not sound like much, but over the course of one year that amounts to an extra $1,296 which could be put towards your savings.

                                                              You could save even more over the life of the loan by keeping your repayments at $1,910 despite the lower interest rate. This could see you pay off the loan years earlier and save thousands in interest.

                                                              These days, many home loan interest rates are even lower than 3.50% p.a. thanks to the last five interest rate cuts from the Reserve Bank since June 2019. Some lenders are even offering fixed home loans in the low 2% p.a. range so it’s really worth shopping around for a competitive rate.

                                                              If you’re unhappy with your current home loan rate and want to refinance, check out some of the lowest rate variable home loans for owner-occupiers in the table below.

                                                              Buying a home or looking to refinance? The table below features home loans with some of the lowest variable interest rates on the market for owner occupiers. 

                                                              Lender

                                                              Variable
                                                              More details
                                                              Online ExclusiveUp To $4K Cashback
                                                              • Immediate cashback upon settlement
                                                              • $2,000 for loans up to $700,000
                                                              • $4,000 for loans over $700,000
                                                              Online ExclusiveUp To $4K Cashback

                                                              loans.com.au – Variable Basic Cashback Home Loan (Principal and Interest) (LVR < 70%)

                                                              • Immediate cashback upon settlement
                                                              • $2,000 for loans up to $700,000
                                                              • $4,000 for loans over $700,000
                                                              Variable
                                                              More details
                                                              Apply In Minutes
                                                              • No application or ongoing fees. Annual rate discount
                                                              • Unlimited redraws & additional repayments. LVR <80%
                                                              • A low-rate variable home loan from a 100% online lender. Backed by the Commonwealth Bank.
                                                              Apply In Minutes

                                                              Unloan – Variable Rate Home Loan LVR < 80%

                                                              • No application or ongoing fees. Annual rate discount
                                                              • Unlimited redraws & additional repayments. LVR <80%
                                                              • A low-rate variable home loan from a 100% online lender. Backed by the Commonwealth Bank.
                                                              Important Information and Comparison Rate Warning

                                                              Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. Some products will be marked as promoted, featured or sponsored and may appear prominently in the tables regardless of their attributes. All products will list the LVR with the product and rate which are clearly published on the product provider’s website. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of June 16, 2024. View disclaimer.

                                                              It doesn’t always pay to be loyal - sticking with the same lender could cost you an extra $1,000 in higher interest payments per year.

                                                              Save on your essentials

                                                              As most of us are now spending more time at home (thanks, national lockdowns!) there’s almost no excuse not to look for better deals on your essential bills, like your home, car or health insurance, electricity bill, and phone or internet plans.

                                                              Because most of us are also working from home, our energy bills are expected to rise. Here are some tips on how to make your home more energy-efficient.

                                                              Take advantage of coronavirus financial support schemes

                                                              If things are really dire, there have been many stimulus support payments announced to assist people struggling financially as a result of the coronavirus. If the company you work for has experienced a drop in revenue of at least 30% you may be eligible to receive the JobKeeper payment.

                                                              You could also defer your mortgage repayments as many of the big and small banks are allowing customers to defer their loan repayments for up to six months during the crisis. Just keep in mind that deferring your mortgage repayments simply kicks the payments further down the road and will increase your repayments and the overall amount of your loan because interest is still accruing in the background.

                                                              If you’re a credit card user, you may also be eligible for some financial support. Some banks are allowing their customers to defer repayments for credit cards and personal loans, while Commonwealth Bank says it hasn’t ruled out lowering interest rates on credit cards.

                                                              Many health insurers are also delaying premium increases until later in the year as a result of the virus while some car insurers are offering policy discounts.

                                                              Savings.com.au’s two cents

                                                              The sucker punch of coronavirus has winded the jobs market and some companies are barely keeping their heads above water. That’s why it’s a good idea to start preparing yourself financially in case your employer asks you to take a pay cut or worse, has to let you go.

                                                              In these unusual economic times, it pays to be prepared.