More than 500,000 Australians are now turning to JobSeeker (previously known as Newstart), all workers who were previously earning a full-time wage but have lost their income thanks to Covid-19. And with more than 850,000 businesses having applied for JobKeeper payments, it appears many more workers will need to survive on fewer hours and thus a lower income than they previously received.
Many Australians who’ve long been paid the same or even less than is available on JobSeeker and JobKeeper know it’s possible to get by on a very low income, with serious budgeting and a lot of going-without. And Age Pensioners certainly live on less, with the single, maximum-rate pension worth $472.15 a week and the couple max-rate worth $711.80 a week – the small upside being that many pensioners own their own home so don’t face rent or mortgage payments, and full pensioners that do rent receive Rent Assistance in addition to the pension.
But for everyone new to receiving the $550 weekly payment from JobSeeker or the $750 weekly payment from JobKeeper, one of the first thoughts is likely to be, can I live on this sum?
Financial advisor and money.com.au spokeswoman Helen Baker says, yes, you can, with this emergency budget. Baker has put together a spending plan that cuts non-essential purchases to a minimum, while helping consumers negotiate on bills and other costs.
It’s worth noting at the start that the budget assumes the person implementing it has had their rent reduced or had mortgage repayments and other financial commitments deferred for six months and has switched to bulk-billing medical services, and doesn’t have a high need for ongoing medical support. And Baker emphasises that it’s not meant to be a long-term budget.
“We want to show Aussies how they can live off these funds and best manage their finances until they can get back to earning their normal income,” she says.
Baker suggests that $200 a week for rent could be achieved by negotiating a reduction with landlords or offering up services around the property such as handyman jobs in exchange for a lower rate. However, getting such a large reduction may prove tricky for some, as SQM Research reports that the average capital city weekly rent sat at $540 for houses and $427 for units in the week ending April 28, 2020, meaning renters would need to negotiate a 50 percent-plus cut.
The budget allows $150 a week for groceries by providing for minimal spending takeaway or delivery food.
“It’s always cheaper to buy groceries and make it stretch across multiple meals, even if the cheapest pre-packed meal costs you $8,” Baker says. “Three meals a day at $8 each, seven days a week, will see this total $168 – which puts you $18 over the $150 budget, without money to spare on other household items.”
This more generous JobKeeper budget increases the rental limit to $300 a week and adds an extra $10 each for eating out and public transport. And although this budget allows an additional $50 for electricity, bringing it to a total of $200 per quarter, this is another goal that may be difficult for the average Australian to meet.
According to Canstar Blue’s electricity customer satisfaction survey from January 2020, average electricity payments differ quite a lot between states and territories, with the most expensive being South Australia with spending of $440 per quarter and the cheapest being $340 per quarter in Queensland. To help cut electricity costs to around $200 a quarter, Baker recommends taking advantage of pay-on-time discounts and looking into what energy assistant schemes are available in each state and territory.
Baker also says it’s important for people struggling to change their spending to match a reduced income to remember that life will get back to normal eventually, but that acting now to cut costs could save them from financial heartache down the track.
“Remember this isn’t meant to be forever,” she says of her tight budgets. “It’s just about keeping your head above water for now.”
IMPORTANT LEGAL INFO This article is of a general nature and FYI only, because it doesn’t take into account your financial situation, objectives or needs. That means it’s not financial product advice and shouldn’t be relied upon as if it is. Before making a financial decision, you should work out if the info is appropriate for your situation and get independent, licensed financial services advice.