What is the COVID-19 Recession:
The COVID-19 Recession is an economic recession caused by SARS-Cov-2, or the COVID-19 pandemic. This recession is noted to be comparable to the Great Depression economic crisis. Much of these devastating impacts come from due to the measures taken to stop the spread of COVID-19, like lockdowns and closing unessential businesses.
How Badly Does the COVID-10 Recession Affect Your Financial Stability:
Millions of Americans and others across the world were affected financially by the coronavirus. Many workers were laid off temporarily or permanently and businesses had to close. The COVID-19 Recession may have affected your financial situation drastically if your financial support (like your parents’ jobs) declined.
Also, the 2020 stock market crash didn’t help those who lived on their investing income. Despite all this, more countries are finally starting to come out from under the darkness the coronavirus wrought.
How to Prepare for a Similar Event in the Future to Ensure Financial Stability:
Being prepared for a similar event can give you less stress in the future. One of the most important things to do is have an emergency fund. Most experts recommend enough emergency savings to cover 3 to 6 months’ worth of essential expenses, but more people are refining it to 12 months considering the high unemployment rates COVID-19 caused.
Next, be wise when investing in the stock market. Diversification is an important principle and one you should definitely follow when building your stock portfolio. Another thing is, don’t be in a hurry to sell your investment when the market starts a recession. If you plan for the long-term, your investment is likely to push through the recession and rise up top.
Third, you should pay off your debt when the economy is stable. You don’t want to wait until you are in another recession, or worse a depression, to pay off your debts. You should also learn to budget which can help you decrease your debt load and live within your means. You should also consider having more income streams, whether that is getting into side hustles or creating a business. This way, you can live on one stream of income and save the rest up.
Lastly, you can consider jobs that are recession-proof. These jobs are usually available and in-demand even when a recession is going on. For example, the medical field is a great choice as doctors and pharmacists are always in need.
Written by Allie Chang