Barry’s story
“The support BGF has been able to offer to our clients through the pandemic makes a huge difference to them. From a Financial Counsellor's perspective we usually first meet a client under stressful circumstances and if they leave with at least some of their stress lifted, then I have done my job.” BGF’s new Financial Counsellor Trainee, Barry on his relationship with BGF clients and the positive impact his contribution is having on their lives.
COVID-19 has added financial stress to many of our clients' lives and by adhering to social distancing restrictions Barry is talking to clients over Zoom and the phone to help alleviate their financial stress.
“The biggest challenge for me and our clients is adapting to the changes that COVID-19 has brought into our working lives. While restrictions allow me to meet with clients in person, say in a coffee shop or park, locations like those do not afford the client and myself enough privacy to discuss personal financial matters. So it would be fair to say that I am missing direct contact with clients.”
Helping clients waiver smaller debts or navigating and providing solutions to financial issues is part of how Barry is assisting BGF clients. One recent success story involves supporting a client with a large amount of debt.
“I’m currently working on supporting a client who has a $15,000 debt and I have just managed to get the bank to waiver that debt in full, so that has been a very big win for the client and the BGF team.”
In response to the financial hardships that COVID-19 is exacerbating, Barry is critical about the Government’s decision to allow early access to superannuation which will leave older clients in financially precarious and vulnerable positions without support.
“The most pressing concerns we are hearing at the moment relate to early access to superannuation through the Australian Taxation Office. Personally, I think it is terrifying. From a financial services perspective, I think it is one of the worst policies any government could have come out with. Whilst the government has introduced strict guidelines around access to super, it is self-assessed by the individual applicant and this had led too many people granted access to their super who don’t meet the criteria. The risk with this approach is that people are left open to sanction from the ATO should their access eligibility be checked.
The value of having a good super balance when you retire is immeasurable. Now, however, with people able to arrange early access to their super (at least up until the end of this year), there is a detrimental impact to their retirement savings. Young people in particular are potentially missing out on tens of thousands of dollars in investment earnings after accessing their super too early and possibly unnecessarily.”
For our community's benefit, Barry has included some financial tips to help manage your money during COVID-19.
Barry’s Top Financial Tips:
My biggest tips for people on low incomes are changing how you think about your Emergency Fund and to make sure you are using the Government Co-Contribution to build your Super.
EMERGENCY FUND – Breaking the poverty trap
One of the first things to do is building up an Emergency Fund. I usually find the best way to think about this is to decide how much you want to save and then set this up as a Debt you need to pay - to YOURSELF! For example, if you want to have $1000 for emergencies think of it as owing - $1000 and figure out how much you can pay every fortnight to reach that goal. Get a completely separate online bank account and set an automatic payment to pay it fortnightly and track your balance from -$1000 to $0. Only then do you start saving for other purposes. If you need to use it, the “Debt” goes negative again.
This just stops you from thinking of it as spending money. If you always think that having $1000 is having ZERO dollars it will change how you break into that fund when you are spending money.
You could consider one of the easy to open Neo-Banks (online only banks) which currently pay the highest interest of around 1.6% - Banks like 86400, UP, UBANK etc. You can find more by searching for Neo-Banks on Google. 86400 has a unique feature allowing you to add direct debit payments straight from the Saver account and UBANK has a Sweep function – meaning you can keep more money earning interest while still paying your Direct Debits.
UNDERSTANDING YOUR SUPER
Know where your Super is and if it currently has any balance or insurances. Understand that if you have Total or Permanent Disability Insurance it may payout if you can no longer work. And if you have Income Protection it could pay you a salary if you cannot work because of an accident or illness. Call your Super Fund in the event of an accident or illness and ask them if you are covered. Have a look at the ATO site linked to your MyGov account. All your Superannuation funds are listed there. If you need help understanding your Super talk to a Financial Counsellor.
BUILDING YOUR SUPER
If you are on a low income you could be using the Government Co-contribution to boost super. If you add $1000 of after-tax money to your Super the Government contributes an additional $500 (subject to income limits) after you submit your next tax return. You could reach this $1000 by putting $40 a fortnight into your Super. If you diligently do this every year for 7 years you would end up with over $10 500 added to your Super. You won’t get a better return on your money through a bank.
Visit this link to start growing your Super.
On the behalf of BGF, a special thank you to the Financial Counsellors Association of NSW who have been fantastic support during the current pandemic.