Since March, Americans and people of the world have been grappling with the effects of the coronavirus pandemic. Covid-19, along with causing illness and loss of life at a catastrophic level, has also had severe economic and financial repercussions.
While we are at a phase of reopening the economy, there are still many restrictions. People have lost their jobs, their businesses, and are facing serious financial stress.
It’s important that even as we work toward returning to a sense of normalcy, we make smart financial decisions. It’s possible that the economic consequences of the coronavirus pandemic could outlast even some of the health effects.
The following are important financial tips to keep in mind during this time.
Continue to Cut Your Non-essentials
Interestingly, Americans’ savings has grown during this time. We’re a country notoriously known for having limited savings set aside. Still, the coronavirus pandemic may have led more people to save what they were earning because they didn’t have as many places or ways to spend it.
You may, as a result of lockdowns or financial fears, have already cut your non-essential spending. It could be an excellent time to evaluate your budget and consider which cuts might be smart to keep.
For example, maybe online grocery ordering has led you to realize that you spend too much when you go into the store without a plan. Perhaps you can continue working out at home rather than paying for that gym membership, or cut down on eating at restaurants.
Build An Emergency Fund
If you didn’t have money saved before the pandemic, you might now realize how important an emergency fund is.
That could be one valuable financial takeaway from this whole situation—you need to have money in savings.
If you are cutting your non-essential spending, create a plan to set some of what you save aside in your low-risk savings account.
Investing in the Stock Market
The stock market remains one of the best ways to grow your money in the long-term. If you aren’t already invested in the stock market, the early days of the coronavirus outbreak in the U.S. could have been a good investment opportunity.
The market was significantly down off its highs, and for people with an understanding of the fundamentals and a stomach for risk, there were potential deals to be had.
If you don’t want to be on the sidelines the next time there’s a similar situation, you should work now to learn the fundamentals of investing and how to make it work for you.
Educate yourself on things like investing in broad and diversified ETFs and mutual funds, so that you’re ready when you need to be.
Managing Debt
If you have debt, you aren’t alone. Managing it could have been stressful during this time, especially if you weren’t working or you have a business that had to close down.
How you manage your debt is essential to long-term financial success.
First, if you have credit card balances, it might be a good time to see if you qualify for a card with a lower interest rate or perhaps an introductory no-interest period. You can then transfer your balances and cut your costs.
If you have a mortgage and you qualify, it might also be a good time to think about refinancing. If you can refinance, you can get lower payments, and you’ll spend less on interest over the long-term. Just make sure that the costs that come along with refinancing aren’t higher than the financial benefits.
There was also an announcement of a potential student loan interest waiver, but you could consider refinancing student loans too.
If you’re re-evaluating how you manage finances, make now the time you get everything organized. Create a calendar or system for tracking deadlines for all of your payments, so you’re never paying late fees.
If there’s a chance you won’t be able to make a payment on time, contact the lender right away. Most lenders are willing to work with people right now, if you’re proactive and explain the situation.
While it’s a tough time for everyone, you can use this as an opportunity to rethink how you manage your money. It will prepare you for the future and other possible downturns like we’re experiencing now.
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FAQs
The crisis had a dramatic impact on global poverty and inequality. Global poverty increased for the first time in a generation, and disproportionate income losses among disadvantaged populations led to a dramatic rise in inequality within and across countries.
How has COVID-19 affected financially? ›
The crisis had a dramatic impact on global poverty and inequality. Global poverty increased for the first time in a generation, and disproportionate income losses among disadvantaged populations led to a dramatic rise in inequality within and across countries.
How did COVID affect the finance industry? ›
The COVID-19 pandemic has also severely affected the financial system, increasing financial risks (Al-Awadhi et al., 2020, Phan and Narayan, 2020). COVID-19 has adversely affected the stock market in uncertainty and reduced stock return worldwide, reducing capital flows.
How to budget during a pandemic? ›
Budgeting and Saving Money During the Pandemic
- Get ahead of the curve and reevaluate your budget right away. ...
- Seek help from outside resources. ...
- Call your insurance providers to see if they offer any plans that are less costly or shop around. ...
- Try ordering out less and plan your meals ahead.
In some ways, the pandemic has been a wake-up call for many on the importance of financial planning, the process of taking a comprehensive look at the way you manage your money, set goals and achieve the financial future you've envisioned for yourself.
What is the financial burden of COVID-19? ›
Globally, the economic burden of COVID-19 was estimated to be between US $77 billion and US $2.7 trillion in 2019 [13]. Another study calculated the quarantine costs of COVID-19 to exceed 9% of the global GDP [14].
What is the financial impact of COVID on healthcare? ›
The AHA estimates a total four-month financial impact of $202.6 billion in losses for America's hospitals and health systems, or an average of $50.7 billion per month. This estimate was derived by combining the estimates of various components of reduced revenue and increased costs described below.
How did COVID affect the economy? ›
Total nonfarm employment fell by 1.4 million jobs in March 2020 and a staggering 20.5 million jobs in April, creating a 22 million jobs deficit since the start of the recession and largely erasing the gains from a decade of job growth.
How has the pandemic changed people's way of banking? ›
The pandemic accelerated a trend toward more digital banking and less reliance on in-person banking, though branches remain important for certain segments of the population, including many small-business owners.
How did COVID affect investments? ›
The average investment ratio before COVID-19 is 1.32% per quarter, and the average level of cash flows is 0.88%. Following the COVID-19 breakout, the investment rate drops to 0.91%, while the average cash flow falls to 0.48%. Moreover, net debt increases from 5.87% pre-COVID-19 to 6.36% during the crisis.
The largest recipients of federal COVID-19 funds through the Paycheck Protection Program loan program and the Provider Relief Fund were hospitals, physicians and clinics, and nursing homes. The largest increase in Federal Public Health expenditures was through the HHS Public Health and Social Services Emergency Fund.
Did people save money during COVID? ›
According to estimates from economists at the Federal Reserve Bank of San Francisco, excess pandemic savings peaked at $2.1 trillion in August 2021 and finally ran out in March of this year.
How much money was lost during COVID? ›
The estimated cumulative financial costs of the COVID-19 pandemic related to the lost output and health reduction is shown in Table 1. The total cost is estimated at more than $16 trillion, or roughly 90% of annual GDP of the United States. For a family of 4, the estimated loss would be nearly $200,000.
How COVID-19 changed our saving and spending habits? ›
Nearly one-third of those surveyed by The Balance said they were saving more now than before the pandemic, and one-fifth even managed to invest more.
What lessons did COVID teach us? ›
“The lessons we have learned from the COVID-19 pandemic underscore the importance of implementing effective policies to improve food environments, encourage physical activity, and protect the health and well-being of families.
How do we deal with the pandemic? ›
Take care of yourself, eat regularly, exercise, sleep enough and reduce all other sources of stress. Do things that give you back the control of your own life. Dedicate time to activities that improve your mood. That can be listening to music, a film, a good book, a hobby you haven't had time for before.
How has COVID impacted the economy? ›
Total nonfarm employment fell by 1.4 million jobs in March 2020 and a staggering 20.5 million jobs in April, creating a 22 million jobs deficit since the start of the recession and largely erasing the gains from a decade of job growth.
How did COVID-19 affect government spending? ›
In the COVID recession, the turmoil and uncertainty faced by state and local governments due to the pandemic led to expenditure cuts, reflected in a contraction of public employment. However, by 2022, state and local expenditures had rebounded, supporting a robust economic recovery.
What is the impact payment for coronavirus? ›
Normally, a taxpayer will qualify for the full amount of Economic Impact Payment if they have AGI of up to $75,000 for singles and married persons filing a separate return, up to $112,500 for heads of household, and up to $150,000 for married couples filing joint returns and surviving spouses.
How has COVID affected compensation? ›
As a result of the impacts of COVID-19, companies are taking actions that have an impact on financial reporting, such as providing revised or new compensation arrangements, evaluating existing compensation arrangements to determine if any specific terms, conditions or estimates have been affected, and/or making ...
