Families Bounce Back From Financial Impact of the Pandemic
Financial life is paved with intention matched with action and follow-through.
Posted Jul 02, 2020
Therapists agree that the trauma and PTSD in relation to COVID-19 will linger long after the pandemic has ended. Not only are parents impacted, but children who have been ripped from their routines are feeling anxiety from its effects.
COVID-19 has shaken our trust and our take-it-for-granted attitude—but reclaiming your “normal” can help build your confidence to move forward and heal.
Here are a few ideas to zero in on to help you bounce back:
Get clear on your household costs. You’ve probably seen your entertainment, travel, vacation, gasoline and dry cleaning costs go to zero. Have you also examined just how much it costs to run your household, especially how much debt you are carrying? This is the time to get clarity.
Attack your debt. Debt can cripple your chances to get ahead and accumulate wealth for the things you truly value (college for your children, a secure retirement, or maybe a special vacation). Examine the debt you carry, and the interest rate and term of the loans.
For credit cards—unless you’re gaming the cards—you might have a sizable rate on your unpaid balance. Not only does that balance weigh you down, but it also impacts your ability to get credit when you need it. Focus on getting rid of those debts to create a life without debt following you month after month.
Start building a surplus. If you lost your job and became dependent on unemployment and savings, no one needs to tell you the importance of having enough money on the side ‘in case’. Whether it’s a global pandemic or a recession that costs you your ability to earn money, a healthy emergency fund can float you comfortably so you can focus on reentering the workforce.
If you’ve lived hand-to-mouth and are caught in the jaws of this dilemma, the only option is to take a very hard look at your spending decisions (from housing to takeout) and make choices that will leave a surplus at the end of the month for you to begin to fill that very important safety fund.
There is no hard and fast rule as to how much you should keep. It depends on your job security and how much it takes to keep your ship afloat (keeping debt to a minimum can really help you keep your cash on the side needs down). While it would be great if you could blink your eyes and fill that emergency stash to full, realistically, it’s going to take time, focus, and reasonable decision-making to build it up.
Rethinking your game plan. Bouncing back from a bad place is actually an opportunity to rethink your priorities, talk about your values and create a game plan for the future. The conversation should begin with understanding your financial situation and then examining the various risks to which you are exposed. Things like life insurance—how much you can buy and at what cost—will likely change as the impact of COVID starts to be understood and priced by the insurance industry.
As you begin assessing and discussing your next steps, remember that momentum is important. If you need help, either from a financial professional and/or a therapist to help you deal—go get it.
Your path to a more secure financial life is paved with intention matched with action and follow through. Remember (as COVID has proven once again), your financial security is dynamic and requires the buy-in of all your stakeholders.
You can do this.