How to Prepare for the Long-Term Financial Impact of COVID-19

How to Prepare for the Long-Term Financial Impact of COVID-19

June 5, 2020         Written By Heaven Speirs

The recent economic downturn in America has forced most households to think in the short-term. How will I pay this month’s bills? What can I afford with my unemployment income? These are important matters to consider, but it’s equally important to prepare for the near future. We’ve already discussed how to prepare for job and income loss and how to protect your credit during the pandemic. Now it’s time to prepare for the long-term financial impact of COVID-19.

How Long Will the Financial Effects of the Pandemic Last?

It’s impossible to say how long the coronavirus outbreak will impact your finances because every family is different. If you continued to work during the pandemic, you may not have a recovery time at all. If you were let go or furloughed during the outbreak, you may spend several months getting back to your former financial state.

In the latest Financial Stability Report, the Federal Reserve states, “The strains on household and business balance sheets from the economic and financial shocks since March will likely create fragilities that last for some time.” There are too many unknowns to set a definitive timeframe for recovery, but we can give you definitive tools to get through the crisis.

Long-Term Solutions to Protect Your Finances

Your focus right now may be on survival, not savings. We completely understand that. These long-term financial tips are designed to help you get through this troubling time and bounce back in the aftermath. Take the right steps now to avoid debt and stress in the future.

  • Halt any unnecessary purchases, even if they were pre-planned. You may have saved for the last two years to get a hot tub, but that doesn’t mean you should purchase it at this time. Instead, hold off until you regain financial stability. If you still have the funds in your savings, go for it! Just don’t buy it right now.
  • Avoid new loans or credit card debt. You may be confident about your ability to repay debt when the pandemic subsides, but there’s no way to truly predict the future. Err on the side of caution and avoid debt as much as possible.
  • Set a strict short-term budget that promotes a healthy long-term budget. You may have to make sacrifices over the next few months to stay afloat. You’ll feel rewarded in the end when you can resume normal spending without debt repayment. Set a monthly budget that aligns with your current income. Then make adjustments as your income restabilizes.
  • Talk to your credit card provider about relief options. You may be able to have interest waived during the pandemic or get a lower minimum payment without penalties. Here is a list of credit card companies offering relief during the coronavirus outbreak.
  • Use your stimulus payment wisely. If you have not already spent your first stimulus check, hold onto it as long as possible. If another economic impact payment is released, spend your stimulus funds wisely. Make sure your bills are paid and your credit is in good standing. Do not use this as an excuse to buy a want instead of a need.

For more financial guidance, check out the Consumer Tips from LowCards.com.

The information contained within this article was accurate as of June 5, 2020. For up-to-date information on any of the terms, cards or offers mentioned above, visit the issuer's website. Many of the offers on this article are from our affiliate partners, and LowCards.com may be compensated if you take action with any of our affiliate partners.

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About Heaven Speirs

Heaven Speirs is a contributing writer for LowCards.com. She remains up-to-date with the latest developments in the credit card industry and the financial sector as a whole. Heaven has over 10 years of experience in online journalism, the bulk of which has been focused on personal finance. Heaven attended Oklahoma State University, where she discovered her talent for research and content creation. In her spare time, Heaven enjoys painting, playing poker, and spending time with her husband and three dogs.