COVID-19 has done more than sickened thousands of Americans; it's also taken a major toll on the U.S. economy. Right now, millions of Americans are out of work, and unemployment claims are through the roof. Meanwhile, small businesses have closed their doors nationwide, whether due to social distancing mandates or the fact that they don't have the money to stay operational. (And let's not get started on the Paycheck Protection Program -- as of last week, it was already out of money, though lawmakers are working to infuse more into it.)

It's not surprising, then, to learn that Americans have a somewhat bleak outlook when it comes to their personal finances, as well as the country's finances on a whole. In fact, 55% of U.S. adults are convinced that the worst isn't behind us with regard to the economy, but rather, is yet to come, according to a recent J.D. Power survey. Furthermore, 40% believe their personal finances will get hurt even more in the coming months. The latter is especially disturbing given that 8% of Americans say the COVID-19 outbreak has "devastated" their financial situation, while 20% say it's already severely hurt their finances.

Man holds young boy in lap while sitting at laptop with serious expression


If you're worried that things are likely to get worse before they better on the financial front, there are a few key steps you can take to protect yourself from that possibility. And the sooner you do, the more peace of mind you'll gain.

1. Assess and boost your emergency fund

If you've managed to hang onto your regular paycheck during the COVID-19 crisis, you may have a prime opportunity to add to your savings. Chances are, you're no longer paying to constantly fuel your vehicle, buy lunch every day, or go out on weekends, so if that's the case, you can use that savings to pad your emergency fund. Under normal circumstances, it's wise to have enough money in the bank to pay for three to six months of essential living expenses. But given that the economy could get worse -- namely, suffer from a full-blown recession -- you may want to aim for the higher end of that range.

2. Secure a backup job

If the economy gets worse, layoffs could become even more widespread. And while now's certainly not an easy time to job hunt, you may be able to find work you can do on the side from the comfort of home, such as online tutoring, content editing, marketing, or web design. Of course, this won't apply to everyone, and there are only so many side jobs you can do safely these days, but if you have the skills needed to get a remote gig on the side, you can use it to pad your savings and also buy yourself a degree of income security in case your main paycheck goes away.

3. Add dividend stocks to your portfolio

Let's be clear: A lot of people are not in a position where they're able to invest right now, so this advice may not apply to you. But if you happen to be sitting on extra money from your paychecks at this time, and your emergency fund is solid, then it pays to invest your spare cash so that it could possibly help you if things get worse on a personal or national financial level. Specifically, you should consider buying dividend stocks for one big reason: Strong companies with a history of paying dividends are often able to continue doing so even when their stock prices fall due to general economic turbulence. If you buy dividend stocks, you might continue receiving income even during a market crash, and those quarterly dividend payments could come in very handy if you lose your job down the line.

It's too soon to tell what a widespread economic recovery will look like, and when it will happen. Much of that recovery will hinge on how soon businesses can reopen, how quickly COVID-19 testing can be rolled out on a massive scale, and whether effective treatment comes into the fold. But if you're worried that we haven't seen the worst of COVID-19, take steps to protect your financial health as well as your physical health. The right mindset could help you better weather the most intense storm we've seen in a long time.