3 Next Steps For Those Struggling Financially: Economic Impact of COVID-19

Our physical and mental well-being have greatly been impacted by the covid-19  pandemic leaving those that have not been immediately impacted with the virus fearful of seeking care at hospitals and doctors’ offices for non covid related ailments. Our economic health has also faced a major downturn as businesses around the globe have been forced to cease operation leaving people worldwide jobless at record rates.

We have entered a “recession” {see things-you-can-do-to-prepare-for-the-next-recession} with roughly 36 million Americans filing unemployment claims amid the coronavirus pandemic  marking a record-breaking high for the U.S. Department of Labor. These unprecedented numbers serve as a sign of the times, as everyone everywhere struggles to make ends meet amidst this global pandemic.    

For those struggling financially, the immediate question becomes - What should we be doing now to begin recovering from this? We have three critical next steps for those impacted by the first-hand economic effects of the COVID-19 pandemic. 

Step #1: Revisit Your Financial Plan  

Whether you’ve experienced a sudden stop in income altogether, a decrease in your paycheck or you’re now reliant on financial assistance from the government, any change in your normal cash flow is cause for a reevaluation of your budget and spending.

While it may sound like an obvious step to take, it’s one that should be done immediately and with care. If you already have a weekly or monthly budget in place, look it over and determine what non-essential costs you could eliminate. As you’re doing this, it’s important to remember: businesses you typically frequent are likely not operating anyway. If you normally budget for a night at the movies every month, weekly dinners out, etc., consider reallocating this “fun money” to cover more essential expenses. Or, you could use it to start or contribute to an emergency fund.

Step #2: Acknowledge the Change

This is an unprecedented time, and it’s affected the lives of nearly everyone across the globe. People in a wide variety of industries - hospitality, retail, food, travel and more - have been left jobless for the foreseeable future. On top of this immense stressor, we’re all fighting the spread of a deadly virus.

If this has made you stressed, angry, sad, devastated - it’s okay. You’re human, and your reaction is justified. But when it comes to standing tall and moving forward financially, the sooner you can recognize the emotional toll these global events have had and come to terms with the “new normal,” the sooner you can begin planning ahead. 

An important part of this acceptance is recognizing any bad habits you might have, specifically financial spending habits triggered by stress. Maybe you’re someone who likes “taking the edge off” with online shopping or use eating out as a way to cheer yourself up. Whatever it may be, now’s the time to practice restraint and remember that these are emotional responses to what’s happening around you. That money may be better spent elsewhere (or tucked away in a savings account).

Step #3: Explore Government Relief Options and Changing Policies

Federal and State governing bodies and private companies alike are working to accommodate out-of-work citizens. The United States  has passed legislation in an effort to amp up benefits for unemployed individuals, and even local governments are attempting to offer relief as well. For example, some local governments have deferred tax payments and made it illegal for power and utilities to be shut off due to a missed payment during the pandemic. Others have urged landlords to halt rent payments temporarily.

Even some insurance agencies and gyms have paused memberships or reduced rates in an effort to accommodate out-of-work individuals. Write down every monthly bill you owe, and begin contacting those companies or agencies immediately. They may not have a forgiveness policy listed on their website, but they may be willing to assist you if you explain your situation - especially since so many people are in a similar spot and not every business is reopening simultaneously. 

Feeling uncertain about the future ahead has become the new normal amidst the COVID-19 pandemic. And if you’re struggling financially, you're not alone. There are resources available to you now, such as stimulus checks and unemployment insurance, to help make this time a little easier. If you’re still worried about what comes next, speak to your financial advisor immediately. Together, you can work on developing a solid plan for moving forward.