How can women manage their money and cope through Covid19?

Today many women in small businesses have been affected during COVID 19. A lot of women have small home-based businesses and are self-employed.   

Some have cafes and boutiques and hair salons with little super to rely on or job-keeper.

So, what can we do about managing our money and getting back on track.

I know most of us have just been getting by and been stressed about getting back on top of things and saving again.

Women who are Self Employed and Small Business Owners

If you’re like one of the thousands of women employers who have had to stop trading. You’re most likely feeling the impact it’s having on your team.

Not to mention the extra responsibility that women have with families and extended families. 

Women in small businesses have a vulnerability of being too kind and we do worry and suffer overwhelm and anxiety about what is going to happen to our employees.

With reduced hours, job loss and so much uncertainty, it can be difficult to know how to help your employees during this difficult time.

With the government providing assistance and financial support to those experiencing reduced hours or job loss.

We’ve summarized how you can help your employees.

At least there is help for the self-employed and small business owner.  Unfortunately, most small businesses have had to close their doors.

We have all experienced our favourite café or small boutique shop no longer open and yet others have thrived.

Temporary Relief for financially Distressed Businesses

There is a temporary increase in the threshold at which creditors can issue a statutory demand on a company and the companies have to respond to statutory demands they receive.

This includes temporary relief for directors from any personal liability for trading while insolvent, and providing temporary flexibility in the Corporations ACT 2001 to provide temporary and targeted relief from provisions of the Act. 

This is now under scrutiny by the government to changes to assist small business trade after COVID lockdowns are lifted.

An example of how this can apply to your company…

Steph, Mon and David own a small company that operates a chain of yoga studios in Sydney. Social distancing measures require the participants in the yoga class to be significantly reduced.

As a result, their company incurs more debt, to the point where it cannot meet its debts as and when they become due and payable.

Under the provisions of the Corporations Act, the 3 owners would be personally liable if the business took on further debt without entering an insolvency procedure like voluntary administration or liquidation.

However, during the 6 month period in which the temporary relief is offered, their business can continue to open.

Their yoga studios so that they can maintain their customers and quickly resume normal operations when the crisis has passed, and continue to incur debt.

When economic conditions improve, the company can pay back the debt incurred.

Reference:

https://business.gov.au/risk-management/emergency-management/coronavirus-information-and-support-for-business/temporary-relief-for-financially-distressed-businesses

Updated Release on Jobseeker

From 25 September 2020, the following changes will be made to the Job-Seeker income test: 

• The income free area for the COVID-19 Job Seeker Payment will increase from $106 to $300 per fortnight.
• If you’re currently earning above $300, your payment will be reduced by 60c for each dollar over this amount. 
• The COVID-19 supplement isn’t considered as income.
• If you’re currently receiving the COVID-19 Job-Seeker Payment as a principal carer, there will be no changes to the income free area.

Is JobKeeper means tested?

Yes, from 25 September 2020, means tests (including the JobKeeper asset test) will also be reintroduced for all payments.

Reference:

https://employmenthero.com/blog/employment-law/covid19-financial-support/

Help and Support Beyond Early Release Super.

The Federal Government is allowing people affected by the COVID-19 coronavirus outbreak to apply for early release of their superannuation.

If you’re eligible, you can access up to $10,000 of your super between 1 July and 31 December 2020.

Are you eligible?

You’re eligible for early release of your super if:

• If you are unemployed, or
• you’re eligible to receive a job seeker payment, youth allowance for job seekers (unless you’re studying full time or you’re a new apprentice), parenting payment, special benefit or farm household allowance, or
• on or after 1 January 2020:
  • your role was made redundant, or
  • your working hours have been reduced by 20% or more, or
  • if you’re a sole trader –  your business was suspended or suffered a reduction in turnover of 20% or more.

Temporary visa holders are not eligible to apply for one lump-sum withdrawal in the 2020/21 financial year.

Reference:

https://www.amp.com.au/support/COVID-19/early-access-to-your-super

What about Women in Small Businesses who don’t qualify?

There are many women who have small home businesses and are self-employed who don’t have super and have been rejected for Job keeper and Jobseeker. 

How does this group of women survive not just managing their money during COVID19?

Most of them have to revert to finding other means of bringing money into the home to survive by letting rooms out and even had to move back in with parents to survive.

Many are relying on charities for help and friends and family with the stress of now having to find a way to repay back when they can get back to work or normal living arrangements and work.

What Practical steps can Women Take in This Situation.

There are many women who have small home businesses and are self-employed who don’t have super and have been rejected for Job keeper and Jobseeker. 

How does this group of women survive not just managing their money during COVID19?

Most of them have to revert to finding other means of bringing money into the home to survive by letting rooms out and even had to move back in with parents to survive.

Many are relying on charities for help and friends and family with the stress of now having to find a way to repay back when they can get back to work or normal living arrangements and work.

What Practical steps can Women Take in This Situation

Practical steps to manage your spending

 Understand how much you owe

The first step is to add up all of your debt, to get a clear picture of what you owe.

While laying all your cards out on the table can be extremely confronting, especially if you’ve never done it before, it’s a critical step to see the bigger picture of your financial situation.

 Keep track of your expenses and income

The next step is to work out how much you can afford to pay to cover your debts.

Having a clear picture about what you earn versus what you spend can highlight areas where you may be able to pull back spending.

Whatever income you’re able to save can then be allocated towards your debt. There are budget-planners and phone apps you can use to track your spending.

Alternatively, you can simply download your bank statements and keep a record of your receipts.

Make sure to include everything from your necessities like rent or mortgage, utilities and transport to what you spend on non-essentials like entertainment.

Investigate the support options available to you

Depending on your situation, there are a number of ways you can get financial assistance to deal with the impact of COVID-19.

Develop a plan to manage debt

Now that you’ve identified how much you owe and the financial assistance available to you, the next step is to develop a plan.

Having a debt management plan in place that’s realistic to follow can help you manage your debt to achieve your goals.

You need to remember to keep a long-term view and to ensure that this isn’t a just a temporary fix otherwise the problems could kick up again.

Set priorities

If you have more than one outstanding debt consider working out how much you can repay on each based on the minimum repayment owing.

Alternatively, if you’re able to repay more than the minimum, look at prioritising your debts.

You’ll need to think about things such as the type of debt you have, for example, an investment loan, or personal debt – and how much is owing.

For example, if you only have personal debt, you may choose to prioritise repaying debts with the highest interest rate first given these will be costing you the most to keep them around longer.

At the end of the day, the approach you take is a personal one but it’s important to have a plan and stick to it. And that could mean making other changes.

Set aside a savings fund for emergencies

While you can never prepare for events like COVID-19, there are things you can do to ensure when these types of situations arise, you’re able to get through them.

One approach may be to set up a savings fund for emergencies where you transfer a small amount of your income to a high interest savings account on a weekly, fortnightly or monthly basis.

This will then provide a financial safety net which you can draw on when you really need it.

Seek professional support

Managing debt is not something that comes easily to most people, so sometimes speaking to a professional can help put your mind at ease.

A financial adviser will assess your situation and provide you with a manageable repayment plan, which may see you pay your debt off faster.

Bottom line: the most important thing to remember is that you can get ahead with managing your debt during COVID-19, but it will require some changes and reprioritisation. Use the various resources and support available to you and stick to a plan.

You can do it!

Reference:

https://www.mlc.com.au/personal/blog/2020/06/manage-debt-during-covid-19