6 months ago the world economy had reached dizzying heights, with global stocks reaching record highs, never seen before in history. But if there is anything that we have learnt from the past, it is echoed in the saying, “what goes up must come down”.
Like many industries which are currently facing the prospect of long term unemployment and financial hardship, the performing arts sector is no exception. An industry which already walks the fine line between success and failure, requires those at the helm of its production companies to take a punt on staging shows which makes betting on the Melbourne Cup and winning look like child’s play.
But what about the thousands of courageous performers who tirelessly follow their dreams, with comparatively low remuneration, who end up disconnected from their creative livelihood and worst of all with no income. What about the stage crew, production managers, stage managers, lighting designers, sound designers, set designers, venue managers, theatre ushers, box office teams, admin staff, marketing agencies, publicists and so many more?
This pandemic has been eye-opening for all of us but as the reality of the situation unfolds we must act now and prepare for the economic fallout which is likely to unfold over the coming months. A recession is defined as a contraction in economic activity and is tied to a widespread drop in spending. Australia has been considered by most, the lucky country, as we have not had a recession – defined by two consecutive quarters of negative growth since June 1991. It is now time to face reality and group together with your closest family and friends because we are all on this ride together. By making adjustments, cutting costs and finding new and innovative ways to keep income flowing, you will be able to emerge from a recession with the same positive outlook, tenacity and ambition you had before it unfolded.
- Reduce expenditure and cut out all luxury costs
Be honest with yourself; there are probably many ways you can still maintain your current quality of life whilst maintaining focus on tightening your belt and cutting out any unnecessary and extravagant expenses. This means buying nothing if it is not ESSENTIAL to living.
Re-consider your means of transport, if it is practical and realistic consider commuting by bicycle or walking. If this is not achievable then look for ways to save money on fuel.
Do you have an extra room in your house? Consider getting a flatmate to share the cost of rent or your mortgage repayments. Maybe you could consider moving in with a family member. I know, I know, this may be asking a lot but the financial benefits may far exceed the downsides (just until the dust settles).
Stop eating out and try cooking at home and be savvy by looking for the best deals on local produce. See how far you can make each dollar go by food prepping.
- Set up an emergency fund
If you don’t already have a fund set aside for a rainy day, then set a goal for how much you are able to add to it on a regular and consistent basis. Your fund should be kept in a separate savings account with your bank. During a time of economic contraction, it is ideal to have three to six months worth of savings. An adequate emergency fund is imperative, particularly if your industry gets hit hard by a recession.
- Pay off high-interest debt
Good debt can be used effectively to leverage your financial position. That said the opposite is also true for bad debt. Bad debt includes high-interest credit cards or personal loans and can really be the Achilles’ heel of your finances. First and foremost pay off the debt with the highest interest rate first then move on to debts with lower interest rates as you can. The principal objective is to reduce bad debt as quickly as possible. This will ensure you pay as little interest on a loan that is haemorrhaging vital funds. Call your financial institution and ask for assistance. Some of the big four banks are currently freezing interest repayments for a set period of time to help alleviate financial stress. It may be worth considering a balance transfer, consolidating all your debts into a single account, as some financial institutions will give a grace period on interest-free repayments for a certain period of time.
- Create additional income streams
Your primary focus should be to keep your current job, however, in a recession there is always the looming possibility that this won’t be an option. Keep your resume updated and be on the lookout for potential new job opportunities. You may also increase your financial security by adding additional streams of income through an online business or any form of additional passive income.
If you are lucky enough to be employed then be a superstar employee. This is definitely not the time to slack off. Show up on time or even early and make sure you pick up the slack. Look for ways to save your employer money. Start networking, so in the event that you do get terminated, you have a list of contacts who may be able to help you out.
- Make sure your loved ones are taken care of and talk it out
Group together with your family and friends and go over ways you can all contribute to keeping your head above water. Other people’s opinions and approach to money may give you great ideas on how to reduce your expenditure and incorporate savvy new ways to generate income.
- Diversify your investments
During a recession, stock prices will usually fall dramatically, which means your investment accounts could be hit hard. While many companies, and their stock prices, will recover out of the recession, some will enter default and cause you to lose money. You can reduce the risk of this happening by spreading out your investments. Think about buying bonds, investing in securities from other countries, or investing in precious metals. These investments, particularly the last two, may move independently of the market and can protect your assets in a recession.
Where can I go for help?
The Australian government has recently announced an $84 billion dollars in financial support for workers, students and businesses affected by the COVID-19 pandemic. This financial support comprises the first economic stimulus worth $17.6 billion and the second worth $66 billion.
As part of the second stimulus package, individuals in financial stress from the COVID-19 outbreak will be able to access a limited amount of money from their superannuation funds. Generally, Australians can only access their superannuation when they reach the age of 65 depending on what year they are born. However, to minimise the economic fallout up to $10,000 can be accessed in the 2019-20 financial year and up to $10,000 in the following financial year tax-free and regardless of age. People eligible for this access include those that are unemployed and those on welfare payments. Eligibility includes those made redundant after 1 January 2020 or whose working hours have been reduced by 20% or more. Sole traders who have been forced to close their business, or who see a 20% or more reduction in turnover are also eligible.
Applications for early access to Superannuation can be made online via MyGov in mid-April 2020.
The second stimulus package will be paid to eligible recipients over the next 6 months at a rate of $550 per fortnight on top of the current welfare benefits. These payments will commence from 27 April 2020. The Australian government is waiving the asset test requirement and waiting periods to access these payments.
The information on this website is for general information only.