The COVID-19 pandemic has caused tremendous and devastating impacts across the globe, with many countries realizing their economic interdependence (created by the modern digital world) at a critical moment in time.
For many U.S. consumers, their financial life during the COVID-19 pandemic was upended so appreciably that the government took extraordinary measures (i.e., issuing stimulus checks in April 2020, temporarily extending unemployment benefits, etc.) to help ease the financial burdens created by a global pandemic.
For many, the overwhelming fear of the unknown, created by a newly discovered virus (with no current treatment to slow or stop its spread), generated consumer panic. Many overbought bottled water, household supplies, and, as history will remember, the now famous Great Toilet Paper Panic.
COVID-19 Quarantines Required Financial Survival During Pandemic
When the pandemic hit unexpectedly, a slew of mandated quarantines across the nation was implemented as safety measures. The result was a work slowdown that ultimately reduced income and potential paid-off time.
- Self-employed individuals and small business owners (think attorneys, accountants, medical professionals, etc.) could not generate income when mandates were implemented. Businesses had no choice but to close until the critical part of the pandemic passed.
- People who depended on a few side hustles to meet extra expenses learned quickly that financial life during the pandemic would also be challenging.
- Individuals who were financially ill-prepared for an unanticipated income interruption were the people who likely felt the most significant impact.
When vaccinations became readily available, state and federal authorities eased quarantine guidelines allowing businesses to reopen. However, another unexpected wrinkle occurred because those businesses that required employees to be vaccinated (to keep themselves and others safe) soon learned that some employees preferred to quit than comply with the vaccination requirements of returning to work.
The above employee reluctance created worker shortages, further exacerbating an economy looking to gain traction and head towards a more balanced financial wellness during the pandemic and beyond.
Even as the U.S. economy bids a grateful farewell to the financial stress during the pandemic, many American consumers are still regaining their financial footing created by various colliding issues, including supply chain shortages that impacted an interconnected global economy.
According to the United States Census, well into the recovery phase of the pandemic, food scarcity issues persist across the country, primarily, although not exclusively, concentrated in southeastern states –
The Financial Impact of the Pandemic was an Important Lesson in Financial Preparedness
Many workers and employees found their employers were unexpectedly forced to shut down their businesses to comply with pandemic mandates designed to keep Americans safe. Many companies were further impacted by international trade slowdowns and supply chain problems.
Some employees lost the bonus income that they had planned, while others lost their jobs. Pew Research Center’s graph below reveals how non-retired adults viewed their financial life during the COVID-19 pandemic –
Source – Pew Research
Even with widespread panic and anxiety levels falling, many consumers now see the light at the ‘end of the tunnel’ even though there are likely to be financial disruptions in day-to-day spending and other bumps in the road.
Prioritize Expenses to Avoid Financial Stress During Pandemic & Beyond
As your priorities change, it is essential to determine if your income is divided in a way that funds your priorities. Your financial life during the pandemic provides excellent insight into how your income is spent and how much you need to save for future emergencies. This clarity is often the motivation to ensure you never lack financial planning during a pandemic.
The Financial Impact of Pandemic & Household/Personal Debt
When the COVID-19 pandemic hit, important safety mandates required social distancing and revised work assignments, ultimately creating overwhelming uncertainty and the reduction of consumer spending/borrowing.
Source – Consumerfinance.gov
Many consumers recognized that having no debt during these uncertain economic times was a smart financial plan. The U.S. Census reported that nearly 16% of stimulus recipients used their first stimulus checks to pay down existing debt.
But, as the pandemic progressed, more consumers depended on credit (and not regular income) to meet their monthly expenses. The U.S. Census noted that in June 2020, more than 33 million American adults used credit to pay expenses and not income. Six months later, this number rose by 10 million to more than 43 million American adults.
A Word About Financial Wellness During Pandemic for Those Approaching Retirement Age
The financial uncertainty the unexpected global pandemic created has also impacted those people who were near retirement age. The 2022 BMO Real Financial Progress Index noted that inflationary data and pandemic income disruptions have affected how Americans save and prepare for retirement.
- The index noted that 60% of younger Americans were recently forced to reduce their contributions to savings and retirement.
- ¼ of older American adults are delaying their retirement due to inflationary economic changes.
Financial Planning During the Pandemic – Beware of COVID Scams
Be vigilant and avoid becoming another victim of unethical ploys designed to feed on fear and panic.
Unfortunately, crises and natural disasters create a ripe environment for fraud and scams, especially in the digital world. COVID uncertainty generated enough fear that some people mistakenly believed in unproven cures peddled by nonmedical professionals. Their poor choices overlooked the advice from the medical professionals, those with the ability to scientifically verify a medical intervention that slows or stops the spread of COVID.
Many households in the U.S. have started to feel the effects of recovery, although certain consumers fell further behind financially from the pandemic’s impacts. Although the worst is likely over with regard to your financial life during the pandemic, the interconnectedness of the world’s economy will probably slow the total recovery in the near future.
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