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2 tips to tighten up your finances in this difficult time

It’s a very difficult time in our country right now – as it is around the world.

Whilst I’m sure many of our readers will not be looking forward to spending more time than usual at home, I think there is a small silver lining in this situation – more time for some personal reflection.

One of the many things I’m sure this current ‘lockdown’ situation has probably thrown into sharp relief is your current financial situation. Heartbreakingly, many Australians would have recently lost their jobs. Whilst the government has released new payments and other support mechanisms for Australians during this dark time, financial stress would be a major problem for many of our fellow countrymen and -women right now.

But in saying this, I also think it’s a good time to bolster your current financial situation with some spring-cleaning (or in our case, autumn-cleaning). There are always things that we probably all feel we could ‘do a little better with’ when it comes to money.

So here are two things that are worth considering at this time to bolder your personal finances.

1) Examine your debts

Debt is something that most Aussies live with on a daily basis – whether it be mortgages, loans, credit cards or HECS. Now, mortgages and HECS are pretty much unavoidable, but also contribute to your overall wealth or income, so we won’t worry about those right now. But the same can’t be said of other non-deductable debts you may have.

During these trying times, credit card debts or personal loan debts are albatrosses around your neck. If you have the capacity to put a dent in these today, it will lighten your financial baggage considerably and will translate into fewer interest payments in the coming months. If you’re worried about investing in the highly volatile stock market right now, it’s also a great way to get a guaranteed return on your money.

2) Put a ruler through your expenses

I’m sure that many household expenses will be dropping off over the coming weeks – restaurant dining is one thing that’s now off the table, for example. But we should also be wary of things like streaming services (or buying/renting movies), online shopping and even using more electricity that might stem from staying indoors.

Going a little stir-crazy isn’t pleasant for any of us, but don’t let it translate into ‘comfort spending’ or buying things you otherwise might not even consider. The last thing your budget needs is some bill shock during these times. Instead, examining through you and your family’s spending might be one good thing to come out of this lockdown.

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As of 17/3/2020

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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