By BRIAN SPURRELL
THIS MONTH’S article moves away from the customary focus on tax tips and tax information and is dedicated to my readers who may be struggling to cope with the pressures and uncertainties we are experiencing under the ravages of COVID-19.
Resilience and wellness are key concepts I explore in the holistic life-planning sessions I usually hold with my clients.
Good financial planning is about having a holistic approach, and the lessons we learn from holistic life-planning can be applied to surviving the challenges of COVID-19.
The tasks we face of surviving both the financial and health impacts of COVID-19 are more likely to be successful if we focus on and accept the importance of building up our resilience and our wellness.
Resilience and wellness
I will define resilience as simply the degree of willingness to overcome obstacles.
Resilience develops from the knowledge and experience of how to cope in spite of setbacks, barriers or limited resources and the ability to bounce back when things do not go to plan.
It also requires good mental health, sustained positive emotional strength, good physical fitness and physical health.
Obviously, there is no magic drug to take in order to develop resilience, but developing a history of surviving challenges helps.
Those who have coped with disasters, such as the loss of their home through a bushfire, the death of a child or life partner, or overcome severe physical or mental disabilities, will understand what resilience is.
Those who have survived wartime and recessions/depressions will also understand the importance of resilience.
Wellness could be viewed as a pathway to — or the process of — becoming aware of and making choices toward a healthy and fulfilling life.
Once achieved, it is a state of complete physical, mental, and social wellbeing supported by beliefs, principles, and values that give meaning, purpose, and direction to our lives.
Walking the road
As is the case with world wars, financial depressions and recessions, bushfires, droughts, floods and plagues, we can be certain that it will end, so instead of asking “how long will it take?” we should be asking “how can we manage the journey?”.
There is only one road out, and we are all on the same road, but how we walk this road is important.
We can walk it reactively, or proactively.
If you choose to travel reactively, you will sit and wait and when the situation affects you in whatever shape or form, you then react to it by borrowing money, calling your accountant, calling on a friend or family member, visiting a medical practitioner or a psychiatrist or simply panicking.
If you choose to travel proactively, you will be thinking ahead, planning what outcomes or goals you want, thinking through how you are going to get there, and when and how it will occur.
Planning in proactive mode
Most successful businesses and entities have a plan or a budget.
How else could you know how you are tracking if you do not have a plan to compare your actual outcomes against?
So, now let us apply these concepts to the family unit, couple or individual level.
In many other areas of our life; holiday, bushfire, household budgets, we often have a plan in place to maximise the outcome.
Regardless of whether you plan, or live from-day-to-day, if there was ever a time to be planning ahead, it is now.
Emotional health plan
There is a strong likelihood you or a member of your family may experience a bout of depression or a sense of helplessness, experience the loss of your job or business, a breakdown in a relationship, children not coping with home-based learning, or it all just getting too much to deal with.
Are you going to wait until the situation reaches crisis point, or will you work on a contingency plan?
Even just a list of health professionals, support services such as Beyond Blue or your GP, along with their contact details, may suffice as a plan.
Talking through your feelings and concerns with a trusted friend or family member is usually a positive starting point, as you are acknowledging that you have a problem, that you are willing to talk to someone about it, rather than just internalising your pain and retreating to within yourself.
There may also be things you could plan to do to assist in reducing stress levels either in your person or your household, such as walking your dog, or offering to walk your neighbour’s dog, or even considering buying a pup to nurture.
Other alternatives you may consider in your plan might be taking up yoga, meditation — or even a relaxing massage.
The important thing is to have thought ahead in “what if” mode, and recorded some notes and discussed it with your partner, family or friend.
You may also keep an eye out for Stephanie Foxley’s monthly Mental Health column or Maree Zimny’s Wellness column.
Physical health plan
It is widely acknowledged that there is a strong connection between physical health and emotional health.
A regular cardio work-out seems to kick in the endorphins which can relieve stress and produce feelings of wellbeing.
In my case, I have found on the days I have a one hour workout first thing in the morning that I am cognitively sharper and better equipped to deal with the more challenging mental demands of the day.
I have observed over the years a number of people who have experienced major emotional traumas and have taken up walking or jogging, even running in marathons as a means of coping with their depression or loss of self-worth.
I strongly recommend you put together a physical exercise plan that embraces a range of exercises including cardio.
You may have to be more creative while confined to home by using substitute objects to facilitate certain exercise routines.
You may also wish to check out Chris Sharp’s monthly Fitness column for some great ideas.
Human contact plan
Stage 4 restrictions are challenging and the drastic change in lifestyle can exacerbate feelings of aloneness and isolation which can impact on our emotional health.
It is therefore important to use the digital and visual media such as FaceTime, Skype and Zoom to regularly stay in touch.
Plan to contact family and friends at regular times and do not be reluctant to discuss how you are coping with everyday challenges.
Sometimes, comforting exchanges between family and friends that are experiencing similar challenges can be just as therapeutic as a visit to a psychologist or counsellor.
Finally, we need to address the most challenging aspect of surviving COVID-19 and that is finance.
When we refer to finance in this context, it embraces the income you earn from employment, your business, your investments, plus your access to borrowed funds through mortgage loans, and other forms of bank finance, credit card and pay later finance, and assets you own that could be sold to release funds such as investments, superannuation, financial support from family, friends, your community and the government in the form of pensions, JobKeeper, JobSeeker and numerous other types of support currently listed at dhhs.vic.gov.au/financial-support-coronavirus-covid19.
Once again, I hope you will choose to travel proactively and prepare a financial plan for your household and for your business if you have one.
The greater the uncertainty we face, the more crucial it is to plan ahead rather than wait for financial disaster to hit you unexpectedly, with no pathway to guide your financial decision making.
A good financial plan should enable us to project where our financial resources may be sourced from and how much we may need to fund our projected expenditure.
Available financial resources are what fuels our daily activities and needs in the same way as petrol or diesel fuels your travel needs.
If you run out of fuel your vehicle grinds to a halt.
The same drama can occur in your home if you run out of access to financial resources, so your financial plan in this time of great uncertainty should take top priority.
A useful starting point if you do not already have a personal or household budget in place is to go on to the ATO website (ato.gov.au) and look for the personal living expenses comprehensive worksheet (NAT 72959-12.2015).
Alternatively, for an excellent and more sophisticated budget planner with the option of using an excel based spreadsheet go to moneysmart.gov.au/budgeting/budget-planner.
Tips on preparing a budget
Select the most appropriate time frame, weekly, fortnightly or monthly, depending upon your pay period or most convenient period for estimating your cash flows and convert all income and expenditure amounts to the equivalent amount per period.
Access the last 12 months bank statements and credit card statements and any other necessary supporting documents in order to build a record of past actual income and expenditure for the time period chosen.
Sort your expenditure items into those that are essential or unavoidable and those that are discretionary.
Use your historical data as the starting point in estimating your budgeted amounts for the first period of your budget.
Ask yourself whether the historical amounts are likely to be repeated or not, and note why your estimates are expected to differ e.g. now working from home or children are learning from home.
Amounts received or paid quarterly or annually etc., will need to be entered into the period they are expected to be received or paid so your net cash flow will vary up or down each period accordingly.
Structure your budget to take you through to December 31, 2020 at least and subsequently extend it to March 31, and finally June 30, 2021.
There is a lot of merit in monitoring your actual monthly receipts and payments against your budget estimates and where necessary revising your estimates for future periods so that your finance plan becomes a living plan.
Preparing a personal or household budget is important because it will inform you — ahead of time — when you may be able to bank surplus cash flow to cover future commitments, or in the absence of cash reserves to draw down on, allow you to plan forward, proactively, and work on where the additional cash can be found, be it selling down shares, seeking additional paid work, cutting out certain discretionary expenditures, or discussing your financial needs with your bank, instead of just taking a punt on providence.
The content of this article is not intended to be relied upon as professional advice.
It reflects insights I have gained from my experience as an educator, small business owner, practicing accountant and custodian of my parents’ and grandmothers’ respective recollections of surviving the privations and challenges, resulting from two world wars, the Spanish flu epidemic and the 1930s depression.
Their stories have left me with a deep appreciation of how resilience and wellness are so essential for survival when the unknown overwhelms our consciousness.
Brian Spurrell FCPA, CTA, Registered Tax Agent.
Director, Personalised Taxation & Accounting Services Pty Ltd
0412 011 946