Times changed quick, didn’t they? The speed at which the economy went from booming and outstanding to plummeting through the floor was shocking. The Coronavirus Pandemic has drastically altered the world as we know it, and now, unemployment has risen to incredible levels.
I must say, I really enjoyed writing about personal finance and saving when I had a day job, and when the economy was in a whirlwind of positive activity. Latching on to an upswing is far more fun than riding out a downturn, especially because they last a lot longer.
So how do you handle this sort of economic turmoil? When the world flips upside down and people are unemployed and unable to even venture outside to look for work, things get tough. Let’s take a look at some of the things you can do to weather the storm and come out the other side better than before.
1. Cut Your Expenses
Fortunately, it’s fairly easy to cut expenses these days. There aren’t places to go eating and drinking every weekend night, and impulse purchases at stores like Target and Marshall’s are certainly way down. Now, you may have purchased an ungodly amount of toiler paper to last the length of this crisis, but that’s your prerogative.
Remember the 50/30/20 rule during this time. If you can reduce your spending so that you aren’t buying unnecessary items, you’ll be much better off. For a mathematical look at it, you can get buy with only 50% of your income if you’re just paying for necessities, and if you can keep the expenses down by cooking at home and cutting out some extra purchases (gym memberships, for example), you can stretch your dollar a little further. Even a 20% reduction in your expenses will get you an extra week per month of earnings. These little actions will add up and help you get through this pandemic.
2. Keep Your Resume Updated and In Use
Brush off that resume of yours, even if you don’t feel like your job is in jeopardy. Get it up to date, and honestly, start sending it out. As people lose their jobs, the already tight job market will get smaller and smaller. If you lose your job, it is much better to have a few interviews already lined up in case things go south. If you don’t lose your job, at least you’ll have kept it updated and prepared for emergencies.
Over 26 million Americans have filed for unemployment insurance since the economic shutdown began. Out of approximately 180 million working Americans, that’s around 15% of the population competing for jobs. If you have already lost your job, start applying. Remember, too, it’s better to accept a job today in something like sales or a generic field instead of waiting for a job in your career field to open up. That process may take months or longer, so you should be prepared to take a job that will at least pay the bills until something better comes along.
3. Find a Side Gig
I will always advocate finding a side gig. If you’re not making extra money outside of your full time job, you are behind the curve. Many economists foresee a gradual shift to a primarily gig economy over the next few decades, where people market their own skills directly instead of going through employers. In the meantime, this side gig may become your full time gig (mine has!).
If you still have a job, this side gig will give you two benefits – you can start saving extra money to build up reserves in case things turn upside down with your full time job, and they help you develop an income over which you have complete control for the same reason. You can continue making money even if you lose your job. If you never lose your job, the extra savings will be a great resource for the future, and you could use to buy cheap stocks while they’re depressed right now.
4. Learn a Marketable Skill
Some people have a lot more free time on their hands during this pandemic, but not everyone. If you do, this is a great time to begin learning and developing a new, marketable skill. For instance, take a real estate course, learn to write computer code, or take up a marketable hobby like making Etsy crafts. Right now, you may not need it, but it will provide an outlet and give you some feeling of purpose during the economic crisis.
When you’re locked up in your house for weeks on end, having a creative or productive outlet can do wonders for your mental health. Beyond that, if you do get some level of skill, you can put it to work making you extra money in the future.
5. Plan for the Long Haul
Experts say this sort of downturn is likely going to last for roughly 18 months. Hopefully it resolves itself before then, but it is best to be prepared for a long economic drought. Even if the stock market itself recovers (the Dow has rebounded to around 23,000 from hitting down as low as 19,000 a few weeks ago), jobs and hiring take some time, and industries will be suffering for quite a while from all of this mess.
Food service businesses like restaurants and diners are losing somewhere around 70% of their income during this time. That creates ripple effects in their long term business. Once things return to normal, even if everyone felt completely comfortable returning to public gatherings immediately (which they won’t), there are consequences to operating without 70% of your business earnings. Foreclosures, bankruptcies, and loans will cause fewer jobs and keep these businesses struggling even when the economy has rebounded.
Because of the level of unemployment, the harsh reality is that you will likely be competing with more workers, and more experienced workers, for the same job, meaning finding work can take a longer time. If you are prepared for the long haul, though, you can make it through this time and come out the other end safely and with your financial goals intact.
It’s tough, I’m not denying it at all. But this doesn’t have to break you. This pandemic is a chance for us to reset and begin to reassess our goals. Many people near retirement age are changing their goals or retirement dates, while younger people are starting to live leaner and work harder. Use this time to create better habits and manage your money better.
Find yourself a job to get through – remember, you don’t need your dream job right now, you just need to get through. It could be 18 months to a couple of years before you find the right job in your own field, so don’t stress if you can’t get the right job immediately. Fill in the gaps with side hustle income, a different job, or some lucrative skills, and use the required isolation to save some money to help you in the long run. We’ll get through this, it just takes some time.