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COVID-19 living on a reduced income

Practical steps to manage your spending and keep on top of your bills

Page reading time: 4 minutes

It can be overwhelming if you suddenly have to manage on a reduced income. Take these steps today to help make tomorrow easier.

If you can't afford basics like food and housing, there is urgent help available.

1. Get government financial assistance

You may be eligible for COVID-19 financial assistance from the Government. This will help cover some of your lost income.

Centrelink payments

There are extra income and household support payments for people affected by COVID-19:

Visit Services Australia for more information on payments and services if you're affected by COVID-19.

JobKeeper Payment

The Government is providing fortnightly payments of $1,500 (before tax) to employers so they can keep paying eligible employees. You can also apply for the JobKeeper Payment if you are self employed.

The Treasury website has more information.

2. Request mortgage or rent relief

Your rent or mortgage payments are a priority. There are steps you can take to make them easier to keep on top of.

Apply for financial hardship

If you have a mortgage, talk to your lender about financial hardship. Some banks are offering 6-month repayment deferrals on mortgages for customers impacted by coronavirus.

You can find a list of bank hardship teams on the Australian Banking Association website.

Ask for rent relief

If you think you'll have trouble paying your rent, talk your landlord or real estate agent. Ask about reducing or deferring payments for 30 days until you have a better idea of your income.

Put the request in writing, so you have evidence that you've tried to resolve the situation. Use this template letter from Tenants' Union NSW.

Loans without interest: apply for a Household Relief Loan to pay for rent and utilities if you've been financially impacted by COVID-19. Loans are for up to $3,000, have no interest or fees and are repayable over 24 months. 

3. Look for ways to reduce your spending

Look at your expenses to see where you can make quick savings. Every little bit will help.

Find quick wins 

Look through your bank or credit card statements for the last two months. Identify anything that isn't essential, or you can defer for a while. This could be things like subscriptions or memberships.

Reduce your grocery and utility bills

Food and utilities are essentials. To reduce your grocery bills:

Compare energy suppliers to make sure you're getting the best deal. Use the Government's Energy Made Easy website. Or Victorian Energy Compare, if you're in Victoria.

Shop around for insurance

If you’re renewing your insurance, shop around and get quotes from more than one insurer. Check the exclusions in policies to see what you're not covered for.

You may be able to save on your premium by increasing your excess or advising them of changed circumstances.

Find out how to get the best price and protection when choosing car insurance or home insurance.

4. Request financial hardship for bills

If you have bills due for essential services such as electricity, gas, phone and water, contact your provider straight away. Explain your situation and tell them you would like to apply for financial hardship.

You may be able to pay the bills in instalments, or get an extension to pay. Also ask if you're eligible for a utility rebate or voucher.

Bill smoothing

To help you manage future bills, arrange for 'bill smoothing'. This is where you spread the cost of your bill over regular weekly, fortnightly or monthly payments. For example, you might pay a set amount of $100 a fortnight towards your electricity bill.

This will help you budget and provide some certainty while you're living on less.

Credit card and loan repayments

If you have credit card or personal loan payments due, continue to make the minimum repayments if you can.

Then contact your bank's hardship team to arrange a hardship variation. This may mean reduced interest or repayments, for a set period.

Ask for payment deferrals or plans

Things are tougher than usual for a lot of people. Many companies and organisations are willing to help you. The sooner you get in touch, the more options you'll have.

If you have private health insurance, contact your fund. Some insurers are offering premium waivers or suspending memberships for members affected by COVID-19. Some insurers are also delaying or cancelling their 2020 rate increase.

Your home or car are valuable assets, so make sure they’re protected. If you’re struggling to pay your car or home insurance premiums or excess, contact your insurer straight away. Explain your situation and tell them you would like to apply for financial hardship. For example, they may provide assistance to meet your excess if you have an accident and you're at fault and need to make a claim.

If you have school, council or body corporate fees due, see if you can defer payment or pay in instalments.

The National Debt Helpline explains how to negotiate payment terms.

5. Accessing your super

From 20 April 2020, if you're affected by the COVID-19 pandemic you may be eligible to apply to access up to $10,000 of your super before July 2020, and a further $10,000 in the 2020-21 financial year.

Your super is your retirement savings. Check if you’re eligible to access your super and consider all your options before applying.

6. Plan for the next 3 months

A budget is the best tool you have to put a financial plan in place for the next 3 months.

Use your expected income and spending to create a new budget. It will help you think about your finances in the longer-term and feel more in control.

Use any surplus you have each week to add to your emergency fund. This will give you a buffer to cover for any unexpected expenses.