For many of us, the challenges of COVID-19 have had more than just an impact on our physical and mental health, but also a significant impact financially. Given the unprecedented event we are currently dealing with, several questions may arise about financial security. Knowing how to navigate the challenges at hand will relieve stress and ensure we build inner resilience.
Preliminary findings from a current survey on stress and resilience in the face of COVID-19 (sample of 276 respondents) indicate that an estimated 88% of respondents felt nervous and stressed in the past month; 95% have expressed worry about the ongoing impacts of COVID-19; and 88% of respondents indicated that they are very worried about the economy.
Given the current uncertainty and not knowing what the near- and long-term future holds for us as it relates to the financial impact of COVID-19, I asked Joel Thomas , CEO of SPIN Global and disaster resilience expert, to share his expertise on how to navigate the financial unknown with COVID-19.
1. What are people’s biggest financial fears at this stage?
There are three main drivers of financial fear that I have observed.
- Loss of wages is never a welcome disruption, as it elicits basic fear of need for provisions. This has been exacerbated by the fact that the impetus for these losses is an uncontrollable exogenous shock, eliciting fear and a sense of the lack of control over these circumstances.
- Second, the tyranny of urgent needs and expenses haunts people. In other words, which bills need to be paid now, which groceries need to be purchased, and which debts need to be kept current? Decisions about what is essential and nonessential, and whether accounts payable can be delayed - these all incur stress. COVID-19 has caused the primary source of income for many to cease, while the outflowing stream of expenses has not.
- Last, there is the fear of the unknown financial outlook. This is informed by the current health and economic crises. How long will COVID-19 last? When will I be able to get back to work from furlough, find a new job, work at full pay again? And, will there even be a job to return to?
2. What are some strategies to survive this pandemic from a financial standpoint?
Now is a time to hustle. Bartering just became chic. According to a recent FEMA national household survey, prior to COVID-19, most Americans did not have $500 on hand to withstand a disruption before turning to borrow money.
It’s not a time to panic, but it is a time to be pragmatic. If you are out of money and have no job, lost a job but have money on hand, or have been furloughed or working on a reduced schedule, I would advise cutting all non-essential expenses immediately. Call those you owe money and request a payment plan, deferred payment, or debt forgiveness. 17 million people filed for unemployment in the last few weeks, and everyone will be looking for jobs. You are your own biggest asset. It is time to prepare to compete and work your networks looking for any and all work, even if it is not something you have prior experience doing. No job is too menial in these times.
If you have a job and have money on hand or have a job and are cash poor, now is a time to carefully assess your financial health, and I would recommend meeting with a financial advisor. Consider how you can limit your risk exposure, make smart investments, give generously to those in need. U.S. Congress passed a $2.2 trillion stimulus that will provide cash payments to Americans in need which will help, but it will not make people whole who have lost jobs, and it is going to take several weeks and months for most people to have in hand. So do not become complacent and rely on the government alone to save you. The government provisions should be viewed as “stop-gap” provisions that partially fill a need. Financial survival for this pandemic is dependent upon your ability to get your expenses under control while finding ways to earn and steward at least enough income to survive.
3. What can individuals who might be faced with unemployment do at this stage?
First, I would recommend that you file an unemployment claim with the Department of Labor, and then follow the advice I gave in question 2. There are a number of government programs that provide medical care, food assistance, housing, and other forms of temporary care. Now is a time to investigate your options, and apply for assistance as needed. Now is not a time to let pride get in the way of doing what you need to do to be able to survive. There was a time early in my adult life when I was volunteering full time and participated in Medicaid. It can be humbling, but know that this season shall pass, and those programs exist for the sole purpose of temporarily helping people navigate through difficult seasons. Last, I would recommend in special cases developing a crowdsource campaign such as GoFundMe to raise money from family and friends to support specific needs that you may have. These types of platforms have been highly successful but do not guarantee success.
4. What should small business owners do to receive assistance?
U.S. Congress passed the most aggressive economic injury loan assistance program in the history of the country. Small business owners can apply for a disaster loan from the Small Business Administration. Also, many states have grant programs, such as Maryland which offers up to $10,000 cash grant. Contact your state for guidance and other programs for which your business might be eligible to participate. Another option is to sell shares in your company to an investor or raise capital through a crowdfund. This is a good way to avoid debt, but it comes at a cost of equity in your business. Last, your business can run a massive effort to pre-sell future purchases, gift cards, and special deals now that patrons can redeem at a later time.
5. Any additional advice to people impacted by this pandemic?
I was recently on a phone call with New York City Mayor Mike Bloomberg and former President George W. Bush. The President said it best when he said that now is a time to demonstrate an abundance of empathy to first responders, health care workers, and those on the front lines of the health crisis. We all have the ability to demonstrate acts of kindness to humanity, and that doesn’t cost any money, just a piece of your time and heart. It is also a time to be hopeful, as we will emerge stronger from this crisis.