The biggest negative impact that the pandemic created is the unemployment and massive layoffs happening globally. Millions of people have lost their job, and according to economists, the worst of the damage is yet to come. As expected, airlines, hotel operators, restaurants, and many small businesses are the biggest victims of the COVID-19 pandemic. Many employees in these industries were forced to take unpaid leaves, cut their working hours, or completely lost their source of income. In the United States alone, job losses are predicted to cost 47 million jobs that translate to a 32.1% unemployment rate. Employees in the hospitality and restaurant sectors who are fortunate enough not to lose their job still reels from the economic fallout as most of them are paid hourly and rely heavily on tips given by customers. Many are now struggling to make ends meet.
The reaction of the stock market to COVID-19 is also unprecedented. Stocks around the world took a nosedive and as the market hit new lows, many are now asking if they should hold on to their stocks right now or sell. From a risk analyst’s point of view, the advice is not to watch the market every minute, probably for your peace of mind, too. Focus instead on the long-term strategy and possibly do an adjustment every three to twelve months. It makes sense to also look at the portfolio that may suffer from permanent or long-term losses due to the pandemic.
While the race to create the first vaccine for COVID-19 is on the way, the reality is that it might take a while to develop one. The pandemic probably would have peaked and declined before a vaccine will become available. Even if they manage to create a vaccine or an antiviral in the coming months, rolling them out to the public will take time.
For an optimist, this COVID-19 disruption will be temporary. Historically, the world’s economy will bounce back. Restaurants and malls will reopen, consumers will get back to consuming, and the stock market will rebound.
Below are some advice and suggestions on how we can weather unemployment, pay cut losses, business closures, and manage our finance during this economic crisis:
Apply for unemployment/business closure benefits
Governments around the world are providing financial assistance for employees who lost their job or small businesses impacted by lockdowns.
Tap your emergency savings if you have one
If you are one of the fortunate and disciplined individuals who built an emergency fund, this is now the right time to use them. That’s right, it’s time to go looking for that spare change under the mattress (or even buying a new mattress if you’re so inclined). I also recommend doing the other points mentioned in this list so you don’t need to drain your emergency fund as quickly.