David Koch - Money Basics for Tough Times

About Money Basics for Tough Times

The essential guide for managing your finances in the wake of COVID-19, and how to turn a recession into an opportunity.

Get the money basics right and get back on your feet after financial disaster.

Australia hasnt had a recession in 30 years so how can you recover from it? The COVID-19 pandemic has thrown the global economy into chaos and stock market on a wild rollercoaster ride. But what about your finances? Whether youve lost on shares, your property or your job, this is a frightening time for everyone.

Getting the money stuff right has never been more important.

Money Basics for Tough Times is about having a plan to recover from financial disaster. Packed with tips and strategies on money management, from negotiating with your landlord to buying groceries on a shoestring budget to investing in crashing markets to starting a side hustle for extra income, pioneering consumer finance journalist David Koch offers Australians hope in an unprecedented era by taking things back to basics.

This is a clear, comforting, concise guide for how individuals and families, despite economic hardship and uncertainty, can turn their fortunes around.

We advise that the information contained in this book does not negate personal responsibility on the part of the reader for their own financial management, including compliance with any legal requirements. It is recommended that individually tailored advice is sought where appropriate. The publishers and their respective employees, agents and authors are not liable for injuries or damage occasioned to any person as a result of reading or following the information contained in this book.

Contents

Introduction

You dont wish a pandemic or economic recession on anyone. The financial strain it puts on average Australians and their families is bad enough. But the ripple effect is even worse.

The tension it puts on relationships.

The loss of self-esteem and self-respect from being made redundant.

Dreams shattered.

Its just horrible.

A generation of Australians has never experienced anything like this. No Australian under the age of 48 has ever lived through an economic recession as a responsible adult. Thank goodness.

But now they are and its scary.

But that stress can be eased through knowledge. Because knowledge is power.

Knowledge can build a personal financial blueprint to not only survive but, hopefully, to thrive during a recession and the slow economic recovery.

That is what this book is all about. Giving you the knowledge and the blueprint to get through this together.

Believe me, a plan will ease the stress, help you sleep at night and be good for your relationship.

Lets remember, your parents and grandparents and great-grandparents survived the recessions and depressions of the past.

• The Great Depression lasted 10 years from 192939 and saw unemployment reach a peak of 30 per cent in 1932.
• In the recession of the nineties, unemployment hit 11 per cent at a time when interest rates soared to 18 per cent. Imagine trying to pay a mortgage in those times.
• The GFC in 2008 saw unemployment in Australia peak at over 6 per cent.

People hurt but they survived. And if they can do it, so can you during these turbulent times.

It all starts with a plan. Not only to shelter from the storm, but also to explore the opportunities it may offer.

Most importantly, that plan starts with you. And thats what this book focuses on you. Not only will I help build that plan with you, Ill also help you build financial habits that will change your life.

So lets get started.

Back to basics in uncertain times

The starting point to getting on top of your finances when the going gets tough is you answering one, just one, very big question: What do I want my money to do for me? Money, and your relationship with it, becomes a whole lot clearer and easier if you have an idea of what you want it to do for you, whether its taking care of your family, keeping a roof over your head or even building up a buffer should your job be affected down the track.

DO THIS NOW

Now that youve answered the big question, lets continue that financial self analysis: What worries you about your finances right now? Where do you want to be money-wise? What do you wish you knew more about clearing debt, making more money, banking, saving What do you want your future to look like, and what big-ticket expenses are on your horizon a new home, repairs, car, education expenses, helping the kids and family? We wont get to all of it here, but refer back to your answers whenever you need some motivation as you read this book.

Where are you at financially right now?

The trouble with a lot of money books is they are just so detailed on all the boring stuff. Most of us like driving cars but only a few of us have any interest in being a mechanic and understanding every working part. I want to know enough to work out whether the car is performing correctly, to ensure Im getting value for money and to avoid buying a lemon. I reckon its the same with money.

TAKE THIS QUIZ: How are you with money right now? Lets start with a quick quiz to see where youre at when it comes to managing your money. I use a budget to help manage my finances. Always Sometimes Never I pay my essential bills (rent, electricity, insurances, etc.) on time. Always Sometimes Never I save 10 per cent of my income each month. Always Sometimes Never I try to keep three months of my income in a separate account in case of emergencies. Always Sometimes Never I plan ahead for large expenses like utilities, insurance, tax payments Always Sometimes Never I never buy anything on my credit cards unless I know I can pay it off. Always Sometimes Never I pay off my credit card balances in full every month. Always Sometimes Never I have specific financial goals Im working towards. Always Sometimes Never I know the interest rates on all my credit cards and loans. Always Sometimes Never I check my bank and credit card statements every month to verify transactions. Always Sometimes Never How did you score? Mostly Cs: You really should get your financial act together now! The economy may be going down the gurgler, but you really dont want to go down with it. You need to get a firmer grasp on financial matters and acquire some skills, but the good news is that, like a lot of things in life, they can be learnt. This book (and the weekly newsletter that comes with it) is a good start. Mostly Bs: Youre on your way to understanding that financial planning and money management make for a secure future. You have a fair understanding of basic money issues, but you need to step it up a notch. You work too hard for your money to risk losing it through sloppy decisions and bad financial habits, particularly when the world around us is going through such turmoil.