Covid 19 coronavirus: Diana Clement: Living on a reduced income

Many food banks are delivering under lockdown; Tauranga Community Foodbank manager Nicki Goodwin checks the shelves at her depot. Photo / George Novak

If you're one of the 30,000+ Kiwis who have found themselves newly on benefit or the many thousands of self-employed people and business owners whose only income has been the wage subsidy, you may be experiencing poverty for the very first time.

Transitioning to subsistence income is hard for anyone, but a complete shock if you have never experienced poverty.

Middle and high-income earners who find themselves suddenly unemployed often do not identify themselves as being like others in hardship and are therefore less likely to seek support and advice, says Rosalie Grant, of the Nelson Budget Service. They may also be at high risk of mental distress.

Miles Lacey of the New Zealand Beneficiaries and Unemployed Workers Union, says once out of work you should expect and plan for being out of work for up to a year, the average time people spend on Jobseeker Support.

"After the lockdown ends, this time could be longer as there will be a lot of businesses that will go bust," says Lacey. "The few jobs that are going are going to have a lot of applicants."

Don't bury yourself in a hole. Get in touch with everyone you pay bills to, and seek advice from the many agencies that can help such as the Citizens Advice Bureau, beneficiary advocacy groups such as Auckland Action Against Poverty, and gambling and addiction services if appropriate. Local councils and Civil Defence can also point you to appropriate assistance.

As soon as possible assess your income and outgoings. Set up a system where you pay your bills at the beginning of the month, says Lacey. Waiting until the end is guaranteed to get you into financial strife. "Add up the bills for the previous 12 months and divide the figure you get by 52. Round up the figure to the nearest dollar and set up an automatic payment or direct debit for that amount."

Budget advice centres have mentors who can help with creating a budget and learning about what are essential and non-essential purchases.

These services can also help negotiate with creditors, says Grant. "We think it is better to be proactive and do this mahi now rather than wait and hope that it will all work out."

At all costs avoid borrowing money, says Lacey. "Repayments will become just another bill on top of all the others. If you get into strife because you borrow money Work and Income will not provide help to pay the repayment or debt."

Unfortunately, borrowing is exactly what higher-income people tend to do when they find themselves in challenged circumstances. They borrow to avoid the pain of doing without perceived needs, says Grant. "It's hard to know how to live on a small income when you haven't had to before."

Tavia Moore of the Beneficiary Advisory Service (BAS) advises clients to look at supplementary benefits that are available to you from Work and Income. "Sometimes you get a really proactive case manager, but in times like this when they are very busy they may not be making these suggestions," Moore says.

For example, Accommodation Supplement is available for rent or mortgage but won't cover all your costs. You may also qualify for Disability Allowance for ongoing health-related costs.

The Special Needs Grant and Recoverable Assistance Payment from Work and Income are also available to self-employed or business people who are out of work currently. Both are loans and need to be repaid. Not everyone qualifies.

If it's food you need, check out the Special Needs Grant, and/or visit Foodbank.co.nz to find local food banks that are operating. North Shore Budget Service financial mentor Abid Al-Atafi says many food banks are doing delivery under lockdown.

Finally, it's humiliating to ask for help, but remember the entire nation feels for those who have been hardest hit by the economic fallout from Covid-19. Do keep your CV updated and do look for temporary work even if it's beneath your usual standards.

• Covid19.govt.nz: The Government's official Covid-19 advisory website