Economic Impact of COVID-19: 3 Next Steps For Those Struggling Financially
CARES Act Coronavirus EconomyThe coronavirus has had an immense impact on our physical well-being, as well as the economic health of individuals and families across the globe. Businesses are being forced to cease operation, leaving people worldwide jobless at record rates.
Roughly 22 million Americans filed unemployment claims over a four-week period starting March 14 - marking a record-breaking high for the U.S. Department of Labor.1 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: Reevaluate Your Spending
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 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: Be Aware of Changing Policies
Governing bodies and private companies alike are working to accommodate out-of-work citizens. Both the United States and Canada have passed legislation in an effort to amp up benefits for unemployed individuals, and even local governments are attempting to offer relief as well.
In addition to the regular unemployment benefits for those out of work or with reduced hours, the Pennsylvania Office of Unemployment Compensation released a new website to apply for Pandemic Unemployment Assistance (PUA). Self-employed workers, sole proprietors, independent contractors, and gig economy workers who were previously ineligible can now apply to receive unemployment benefits (go here to read the FAQ’s and begin an application).
Many companies have begun giving discounts or waiving payments for those who are experiencing financial strain. 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.
Feeling uncertain about the future ahead has become the new normal amidst the COVID-19 pandemic. And if you’re struggling financially, you aren’t alone. If you’re still worried about what comes next, give me a call. Together we can work on developing a solid plan for moving forward.
About Justin
Justin Buttrick is a financial advisor and the founder of Vision Wealth Advisors, an independent financial services firm. With more than 10 years of experience and the Accredited Asset Management Specialist℠ (AAMS®) credential, he uses his knowledge to help his clients make smarter financial decisions. Learn more about Justin by connecting with him on LinkedIn or emailing justin.buttrick@lpl.com.
Securities offered through LPL Financial, member FINRA/SIPC. Investment advice offered through Private Advisor Group, a registered investment advisor. Private Advisor Group and Vision Wealth Advisors are separate entities from LPL Financial.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. No strategy including asset allocation can ensure a profit or protect against a loss. Investing involves risk including loss of principal. Guarantees are based on the claims-paying ability of the issuing company.
