There is no doubt the coronavirus pandemic has had a profound impact on the global economy. In the United States alone, unemployment is at its highest since the Great Depression. Many people are finding themselves out of work, in debt, and unable to pay their bills. “This is just temporary” may be a comforting phrase, however, the effects of COVID-19 will still be impacting your finances in a year.
Ways COVID Will Effect Your Finances in a Year
COVID-19 has changed just about every aspect of our lives. We are not interacting the same way, spending, saving, and investing the same way. Everything is different. Financial experts have already begun to see changes in how people are handling their money. In a year’s time, things will likely look completely different, especially in these three areas…
- Younger people will be more conservative. Like individuals who grew up during the Great Depression, younger people will likely make the choice to be more conservative with their money in the event something like this happens again. With millennials seeing two recessions in their lifetime, it is likely they will want to decrease risk as much as possible when it comes to investing.
- Folks are going to be rethinking their spending and saving habits. On top of being more conservative when it comes to where they invest their money, people will also start saving more and paying close attention to how they spend it. Some financial advisors have said their clients have begun establishing emergency funds to help them cover six to 12 months’ worth of expenses.
- Living expenses will be altered due to more individuals working from home. A lot of businesses have transitioned into 100% remote workspaces, meaning people aren’t tied to a desk or location. Because of that, it is predicted many people will move out of cities to save money. Even if you don’t move, you will still be saving money on work clothing, transportation costs, and other work-related expenses.
The impact on your finances in a year may not be all that bad, but the economy will definitely be changing. It is likely we will see more businesses close, individuals filing for bankruptcy, and, as a result, more people paying closer attention to their money.
Readers, what do you think the biggest impact COVID-19 will have on your finances in a year?