The recession has been a major talking point around the world in recent years. Since the economic downturn of 2008, many people have looked at the fallout of recession in more detail.
The second part of the global financial crisis (GFC) had little effect on the Australian economy. Many think that part three is on its way and some experts believe it will have consequences for the whole world.
Still, Australia is in a strong position right now. For many, it’s potentially the right time to get a home loan. But you have to remember that no country is immune to the effects of the GFC.
This means you need to pay close attention to your own finances and prepare yourself for what might happen. That’s where these tips come in. By following these five tips, you ensure you’re as prepared as possible for GFC part three.
Tip #1 – Maintain Job Security
Job security offers many benefits. You reduce the amount of stress in your life because you feel comfortable in your work. A stable job also makes lenders more likely to consider you for a home loan.
But you need to stay up to date with the latest advances in your industry to maintain your job security. Upskilling and educating yourself on the latest technologies make you an asset to your employer. This means you’re less likely to lose your job if a GFC happens.
Furthermore, pay attention to your contract. You may find clauses that could cause issues if you aren’t careful.
Tip #2 – Get Rid of Your Debt
Those in debt experience a lot of problems during a GFC. Collectors come calling and interest rates spike as lenders try to protect themselves.
Take a serious look at your debt situation and be honest with yourself. Are you needlessly building more debt to fund a lifestyle you can’t afford long term or in the event of increased interest rates? Now is the time to try to reduce those debts.
Prioritise your payments, focusing on the largest debts with the biggest interest rates first. Budget according to your income, rather than trying to pay for a lifestyle your income can’t sustain.
Tip #3 – Keep Saving
Your savings offer you a safety net in the case of a GFC. But many people still don’t put any money away.
It’s a good idea to put 10% of your pay into a savings account each month. Ideally, this account will have a high interest rate, so your money can earn more.
With some accounts, you could earn up to 6.5% interest on your savings. As a general rule, look for a savings account that offers at least 4% interest.
Tip #4 – Manage Your Relationship
You may feel you’re secure because you’re managing your money alongside your partner. But you should remember that if a GFC affects one of you, it affects both of you.
Sit down with your partner and draft a list of financial goals you both share. Also, be honest about your current expenditure. You need to confront the issue if one of you spends beyond your joint means.
This requires good communication, as the subject of money can cause arguments if approached poorly. Always remember that the conversation should focus on making the financial base of the relationship stronger.
Tip #5 – Create a Budget
Another simple tip, but one that many people don’t follow. Creating a budget allows you to keep track of your income and expenditure.
Create a list of everything you spend money on during the course of a month. This will include the essentials, like your home loan or rent payments and bills. You’ll also create a list of unnecessary expenditures, which is where you should look to save money.
Cut down on any unneeded expenditures and put the money into a savings account.
What to do next
Recession-proofing your home can seem difficult. The burden of a home loan, alongside your other bills, can make it seem impossible to save money, but you can do it with the right help. Follow these three steps to get started:
• Find a better deal on your home loan with uno.
• Calculate how much you need to borrow if you’re considering a home loan.
• Speak to an expert using uno live chat.
This information is general in nature, and you should always seek professional advice when making financial decision.
This information in this article is general only and does not take into account your individual circumstances. It should not be relied upon to make any financial decisions. uno can’t make a recommendation until we complete an assessment of your requirements and objectives and your financial position. Interest rates, and other product information included in this article, are subject to change at any time at the complete discretion of each lender.