COVID-19 has had a tremendous effect on millions of Americans' finances. With approximately 22 million U.S. adults filing for unemployment benefits over the last month and the stock market experiencing one of its worst quarters in history, this pandemic has the ingredients to result in a full-scale recession.
Some people believe this recession could be one of the worst the U.S. has ever experienced. Approximately 80% of investors think we're headed toward a global recession, according to a recent survey from Investing.com, and around 70% believe a COVID-19 recession will be worse than the 2008 financial crisis.
However, the country's financial outlook is not all doom and gloom. There is a silver lining, and there's a chance you could come out of this recession in a much better place financially.
Looking at the bright side
Times are tough for millions of families, and it's hard to find anything positive about the COVID-19 crisis. If there's one silver lining, though, it's that now is a good time to invest for the future.
Stock prices have reached record lows over the last month, which in itself is not necessarily a good thing. However, low stock prices also mean that the market is essentially on sale, and by investing now, you can get more bang for your buck. You've probably heard the wise financial advice to buy low and sell high, and right now is a great opportunity to buy low. Then by the time you're ready to sell, stock prices will hopefully be much higher.
It could take years before the market bounces back from this recession, but it will recover eventually. As the market recovers, stock prices will rise and your investments will increase in value as well. By investing now, you're essentially getting in on the ground floor and will reap the financial rewards when stock prices are on the upswing again.
Should everyone be investing right now?
The coronavirus pandemic has put many Americans in a tough spot, and not everyone should be investing right now. If you're going to invest, make sure you have at least three to six months' worth of savings set aside in an emergency fund in case you lose your job. It's best to avoid touching your money after you invest it, so the last thing you want to do is invest and then have to withdraw your cash a month or two later to pay the bills.
If you can't afford to invest right now, that's okay. There are some other silver linings to this situation that can help improve your finances over the long run.
For one, now is a great opportunity to revamp your budget. It's easy to get into a habit of spending more than you should, so take this opportunity to map out all of your expenses and slash any costs that aren't necessary. You could potentially save a couple hundred dollars per month simply by cutting out things you don't need. Budgeting is a lifelong skill that will come in handy long after this pandemic passes, so by mastering this skill now, you'll be able to continue saving money for years to come.
Building a healthy stash of emergency savings is another crucial skill you can practice right now. Even in good economic times, it's smart to have an emergency fund to cover unexpected expenses or tide you over when you're in between jobs. In periods of economic crisis, it's more important than ever to have some savings to fall back on. It can be tough to save more if you've been laid off or furloughed, but by building a budget and cutting costs, you might be able to divert more money to your savings. You might be surprised at just how much you can save, and the more you practice budgeting and saving, the better you'll be at this skill.
Make no mistake, the coronavirus pandemic has put severe strain on millions of Americans' finances, and there aren't many positives about an impending global recession. However, by taking steps to improve your financial situation, you can build lifelong skills and invest in a brighter future.