The coronavirus pandemic has led to record-breaking losses in the stock market, and many American workers are plunging further in financial insecurity as they are forced into unpaid absence.
A 2019 survey from CareerBuilder found that 78% of America’s workforce is living paycheck-to-paycheck, while a 2018 report from the Federal Reserve revealed that almost 40% of American adults are unable to cover a $400 emergency. According to a 2018 study from Northwestern Mutual, the average American has approximately $38,000 in personal debt, excluding mortgages.
With a future of economic tumult on the horizon, WalletHub has created a list of steps to take.
The first of these is ask your bank or credit union for assistance. This can take form in many ways, from getting fees waived and delaying payment deadlines to increasing the sum of an existing line of credit. As WalletHub analyst and spokesperson Jill Gonzalez explains, “The relief coming from banks and credit unions can also apply to auto loans, although things like housing will take precedent.”
The second suggestion on the list is to maximize savings. Financial experts unanimously recommend having 3-6 months of expenses stashed for a “rainy day,” and according to Gonzalez, it’s paramount for consumers to use these funds as frugally as possible. If your lapse in income lasts longer than 3-6 months, she suggests “limit[ing] your spending to the essentials and put[ting] aside as much money as you can from each paycheck. This way, if the coronavirus affects your ability to work, you can stretch out your savings for a longer period of time.”
If you are encountering a trip cancellation because of the coronavirus, Gonzalez advises that you take advantage of any travel insurance that may exist. If travel services such as airlines refuse to cover your loss, you may be able to obtain reimbursement from your credit card company.
Speaking of credit cards, Gonzalez suggests using them in lieu of cash.
“Though there’s not much evidence to show that touching cash spreads coronavirus, it’s theoretically possible, and the Federal Reserve has been quarantining bank notes from Asia,” she says. “Using a credit card’s contactless capability may help give consumers more peace of mind. Plus, credit cards can be used for online purchases, allowing consumers to avoid shopping at crowded stores.”