As COVID-19 has spread from Wuhan to the rest of the world, including the United States, the coronavirus pandemic is not only a public health crisis, but it is also an economic crisis. Even if you never get the virus, your wallet will certainly suffer its effect.
You're probably already feeling the impact on your finances already. The question is, how bad is this effect on you, and how much worse will it get?
People who save on retirement and other long-term goals, for example, have seen the value of their 401 (k) and IRA stocks drop by almost 30%, on average, in just a few weeks. Those who work for hotels, airlines, sports stadiums, restaurants, or Movie Theaters, especially if they work in shifts, or they run a small local business that the pandemic has already had a significant impact on their revenue, as consumers no longer patronize them due to the lockdown.
Despite Federal Reserve efforts to continue to bring money into the economy and maintain it as part of Washington's $ 1 trillion stimulus package, many experts believe that recession now more than ever seems inevitable. The first indicators are already starting to appear. In essence, retail sales fell more in February this year, and unemployment claims will increase in by April and May, just before the full force of coronavirus retention measures begins to take effect.
It is never a good idea to panic in situations such as this. Still, it is certainly reasonable to worry about the potential impact of the pandemic on your financial health and physical well-being and to prepare as much as you can. This is what you need to know and do now.
Emergency saving is essential at all times, but it is especially important in times like this when unemployment worsens, and economic uncertainty abounds. A solid emergency fund is one that has enough money to cover essential living expenses between three and six months, and for now, it would not be wrong to attain the upper limit of this range. If you're still working, use your salary to cover your savings, especially if you don't have three months of bank spending.
The stock market fluctuated recently, and although it may be tempting to withdraw investments to avoid further losses, it will only lock losses already gotten. Instead of following this path, remember that if you sit down and manage things, the stock market is likely to recover in time. That said, you don't have to leave your wallet alone if you bought more than one stock. Now is a good time to invest in quality companies whose shares are for sale, so if you are good at emergency savings, you can use the extra money to add to or diversify your portfolio.
When unemployment hovers over you, you may not be worried about what your finances will look like in 20, 30, or 40 years. But just as it's the right time to add to your equity portfolio, it's also the right time to continue funding your 401 (k) or IRA as long as you can do it financially. The money invested in this account can now be used to value up-to-date investments that can grow exponentially over time.
If you are still working, you never know if the current crisis will force you to quit your job. And if you are already unemployed, it can take a long time to earn a salary again. Therefore, access to additional money is essential; so, if you are running low on emergency funds but you own a home, you can pay to apply for an equity line. This way, you do not borrow money with which you immediately accumulate interest, as in the case of a crowdfunding loan. Instead, you give yourself the option to borrow if necessary.
The 2019 tax filing deadline has been extended to July 15, 2020, but if you receive a refund, it's worth sending your returns on time. This way, the IRS can operate to recover your money. Another thing: if the appropriate gross earnings in 2019 are lower than in 2018, it could mean the difference between receiving a total stimulus payment in the following weeks or determining the reduction or total elimination of the payment, as seniors can become ineligible.
Many Americans are struggling now, physically, emotionally, and financially. And while the first two may be difficult to solve, at least you can do your part to alleviate some of the money problems you may face when making smart decisions that serve you well.
Flynn Financial Group Inc