How is COVID-19 impacting your money? Government and business responses to aid victims and spreading may help. But some of these measures will change how we deal with money. Therefore, we need to grip up and be well informed to make responsible financial decisions moving forward. Can you save yourself?
How are we impacted by business decisions?
Many of us work for private and public companies, including federal, state and city offices. Some of us are also entrepreneurs and hustlers. For many of us, our knowledge about COVID-19 comes from shared news on social media. But many of these articles are lacking in relevant data about what we eat, how to boost our immune system, and what we do about our money. Can you save yourself and your family?
Right now, America is experiencing a decline in demand and/or Gross Domestic Product (GDP) output this fiscal quarter. Take notice for a moment that businesses are shutting down normal operations, there are restrictions on travel, and more people are working from home. This will hit home even if you haven’t seen it by now. Basically, the economy is shrinking. These are economic signs that the country could be headed for a recession.
What is a recession and why should we care?
A recession is a period in the business cycle when economic activities are in a general decline, typically accompanied by elevated unemployment, falling income, and consumer spending. This also includes rising business failures and falling stock markets. The Associated Press, for example, reported that three of the biggest automakers agreed to shut down all their factories to protect workers. Scary and unpleasant as they are, recessions are a normal occurrence in the modern economy, but the U.S. economy hasn’t suffered a recession since 2009.
Usually, a recession is declared when a country’s GDP is in negative growth for two consecutive quarters. But that condition is not always required, the authorities could make their call based on other economic indicators—or simply monthly GDP data, if things deteriorate quickly. For example, if the U.S. experiences more reductions in consumer and business spending, we may start seeing more layoffs and bankruptcies. Layoffs drive unemployment rates higher and that’s not a good sign as we are all too familiar.
A recession could range from a few months to several years before economic growth picks up again. When recessions happen, some of us tend not to make out well. In the U.S., large-scale quarantines, travel restrictions, and social distancing could drive consumer spending and business investments down in this year. We are still in the first fiscal quarter which is between January and March. Look at what has already happened in response to COVID-19.
The second fiscal quarter is between April and June. This could cause corporate bankruptcies and bailouts which adds pressure to the banking and financial system. Some economists predict a recession can extend into the third fiscal quarter (July – September). Many businesses have transitioned employees to remote working and there are people who don’t have jobs that allow them to work from home.
The stock market typically declines sharply before a recession is officially called and these indicators already went down. This has already happened, and if you weren’t aware of this, you must step up your awareness of what’s happening. Recently, President Trump called for immediate cash handouts to low-income and middle-class Americans suffering financially from the COVID-19 crisis to keep the economy going. But some of us know some people will not receive more gold.
We are approaching a time that will likely challenge more of us to begin doing for self to stay safe and healthy. Maybe even you. A check may not bring long-term relief. Our spending on rent, groceries, childcare, and other necessary expenses are recurring which means we may ultimately have to find ways to make due on our own.
Most people can’t imaging living without cash in their pocket or credit on their card. But for the vast majority of us, the first thing that has to change in order to survive is our mental framework. We shouldn’t waste time thinking the government owes us something. Those who think they are entitled to free money usually end up suffering first.
Time is ripe for us to seize the moment by obtaining more knowledge, wisdom, and understanding in general, but specifically on these issues. Some of our parents might have taught us that money is the root of all evil. But money is not necessarily the root of all evil. For many, it’s the lack of money that’s the root of evil. Instead of taking what we see and hear at face value, we should take a moment to think critically about where we are. Why is this important? Because there is a possibility we can go into a phase where everyone has to stay home. Are you ready?
Okay, so what now?
Every once in awhile, it’s a good idea to take a step back and examine our financial decisions. The economic impact of COVID-19 is one of these times. Are our financial decisions wise? How do we make wise and financial decisions? These are important questions to ask since they are a part of being all-wise and righteous. It’s 2020, so here are 20 things to help you get through these challenging times:
- Pay attention to what’s happening.
- Be honest with yourself (always!).
- Eat to boost your immune system.
- Embrace uncertainty (but prepare yourself).
- Be mindful of social distancing.
- Look for remote jobs.
- Focus on your and your family’s needs.
- Create a spending plan and budget.
- Create an emergency fund.
- Don’t make big decisions quickly.
- Learn more about the economy and the financial world.
- Think essentials and think long-term
- Try minimizing your stuff.
- Take charge of your life and responsibilities.
- Save 10-20% of every dollar you have.
- Get financial advice from someone who’s qualified.
- Think before you spend.
- Avoid taking on any further debt.
- Find ways to make extra money.
- Be swift, changeable and flexible.
P E A C E !