If you’re fortunate enough not to have been affected financially by coronavirus, you might find you’re spending less and saving more.
The COVID-19 (coronavirus) outbreak has seen Australians rise to the challenge of a new way of life involving a lot less time spent outdoors and a lot more time spent at home.
We’ve seen new concepts added to our daily vocabulary like social distancing, flattening the curve and self-isolation.
We’ve needed to adjust as our ability to socialise, travel and spend has been severely curtailed.
We’ve not been able to eat at our favourite restaurant, see our favourite band or support our favourite footy team.
It all adds up to a lot less money changing hands. Initial estimates indicate spending is down 20%1 per person in Australia compared to pre-COVID levels.
And it’s not just discretionary spending on recreation, eating out and shopping. We’ve also been spending less on regular household budget items like commuting (we’re doing less as we work from home), childcare for pre-school kids (temporarily free) and even health insurance premiums (many providers have put increases on hold).
How to put your savings to better use
So if you’re fortunate enough not to have been affected financially by coronavirus through reduced working hours or loss of income, you might find you’re spending less and saving more.
Rather than leaving this money sitting in your current account, here are some tips you can think about to help your money work harder—particularly with interest rates sitting at historic lows.
- Make extra repayments to get a head start on your home loan—AMP’s Home loan repayments and offset calculator can help you see how to pay off your mortgage faster. Use our home loan repayment calculator to find out how much your ongoing mortgage repayments could be, and the amount of interest you’ll need to pay over the life of your home loan.
- Set up an offset account to reduce the term and interest on your home loan. An offset account linked to your home loan may help you to pay off your home loan ahead of its term and save thousands of dollars over the life of the loan, simply by depositing all your regular income and earnings into your offset account.
- Open a high-interest savings account like AMP Saver to get your money working harder. AMP Saver offers a great ongoing rate, no monthly fees and easy access 24/7.
- Put some money aside for a rainy day by setting up an emergency fund so you’re not caught short if something happens. An emergency fund could help you cope if you need instant access to money for those times life throws you a curve ball.
- Top up your super by making extra contributions to set yourself up for a comfortable retirement. There are plenty of ways to top up your super, including salary sacrifice, spouse contributions and government co-contributions.
- Look at investing in growth assets like shares to potentially build your long-term wealth—rather than trying to time the market by purchasing shares on any given day, AMP Capital Chief Economist Shane Oliver says “a good approach for long-term investors is to average in over several months” with regular investments, particularly in volatile times like these.
- Check out these investment options to see the different types of assets you can invest in, from cash to real estate investment trusts and all points in between. There’s more to investing than super and property when you’re building your own investment portfolio.
All investing comes with risk so it’s a good idea to speak to a financial adviser. If you don’t have one but you’re after some advice, you can call AMP on 131 267 or use our find an adviser search function.
We’re here to help
We’re here to support you in these challenging times. Our COVID-19 hub has financial insights, tips and help for people affected by COVID-19.
And while you’re thinking about your finances it’s also important to look after your physical and mental health.
If you’re struggling to cope during the COVID-19 crisis you can call Beyond Blue’s Coronavirus Mental Wellbeing Support Service on1800 512 348.