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Oct 22

Coronavirus and Personal Finance – A Sweet Love Hate Relationship

Reading Time: 3 mins

The government-mandated shutdowns in response to the coronavirus have decimated the economy. Six months with limited economic activity have caused many businesses to close, throwing people out of work. It has caused many more to go deeply into debt, trying to keep businesses or their own households afloat. Limited government assistance simply isn’t enough to cover weeks or months without money coming in.

The costs associated with these oppressive government policies in the name of public health are mounting. People are spending more on groceries, because the stores ran out and they bought whatever was available. People are often spending more on their bills, because they’re not able to leave their homes. Now you’re consuming more electricity and water. They may be paying to have favorite restaurant meals delivered to their home.

That doesn’t even take increased educational and entertainment expenses into account, as you try to keep the kids busy and engaged. Everyone else is drinking more and streaming more to try to cope. Others are buying office furniture and better computers so they can work from home. They’re the lucky ones, because an estimated one million Australians lost their jobs by May, 2020.

For Australia as a whole, spending is down around 14%. Some changes in consumer spending were obvious, such as people stuck at home spending less on gas and tolls. However, this needs to be compared to the greater drop in income. Only upper class families that were spending a ton on extracurricular activities and travel are saving money. Everyone else is left financially struggling. Nor is the problem solved by young people moving back in with family, though that may solve their immediate crisis.

Australians have been closing credit cards, but this doesn’t mean they don’t need financial assistance. They’re putting their student loans and mortgages in forbearance, delaying payments as long as possible to raise cash to pay for essentials. If you have a job, you’re eligible for cash loans at gdayloans.com.au. This allows you to raise money to pay immediate bills, and you can use that loan to refinance overdue bills.

The long-term challenge will be rebuilding Australia’s economy when we reopen. The economy shrank by 10 percent in the second quarter of 2020. That was its first recession in 29 years. A slight recovery later in the year as some areas partially reopen and more businesses shift to online work isn’t going to be enough to ease the financial crisis many individuals and small businesses face. And that financial crunch will not ease overnight, once government restrictions in response to the virus are lifted.

 

 

 

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