The U.S. economy could remain sluggish well into 2021 -- and possibly beyond. Here's what to do to prepare.
At long last, coronavirus vaccines are slowly but surely becoming available, and health experts predict that the general public should be eligible to get vaccinated in the spring. Once enough people get the vaccine, we'll hopefully see the outbreak start to wane, and in time, life should return to normal.
But where does that leave the U.S. economy? While certain restrictions -- dining capacity at restaurants, for example -- may be lifted once the pandemic loosens its grip, it could take a long time for the economy to improve and for countless people to recover from the financial fallout. In fact, the economy may not recover in a meaningful way until late this year, or possibly beyond. If you're worried about how that might impact you, here are a few important moves to make.
1. Boost your emergency fund
During times of economic distress, having extra money in a savings account really helps. If you have some cash in an emergency fund but could use more, now's a good time to pad that account. Maybe you've managed to sock away three months of living expenses, but you'd feel more comfortable having four or five months' worth on hand in case you lose your job. If you're saving some money naturally during the pandemic because you're not commuting, dining out, or socializing outside the home, stick that cash in the bank so it's there for you if you need it.
2. Secure a side income
Losing your job is a scary prospect, but unfortunately, unemployment has been rampant during the pandemic. And there's a good chance more jobs will be lost before the economy improves. If you're worried about being out of work, get yourself a side hustle, whether it's a telemarketing gig, web design work, or selling homemade hats and scarves. That way, if your main source of income goes away, you'll have a backup. Keep in mind that if you lose your job and become eligible for unemployment benefits, they may not kick in right away, so a side gig could help bring in some money in the meantime.
3. Pay off costly debt
If the economy doesn't improve this year and you do lose your job, the last thing you'll want is costly debt hanging over you as you try to keep up with your expenses. That's why now's a good time to pay off unhealthy debt, like your credit card balances. If you owe money on multiple cards, consider a balance transfer to move your various balances onto a single card with a lower interest rate. (You may even qualify for a 0% introductory rate.)
Without a crystal ball, it's impossible to predict when the economy will stage its recovery. While there's reason to be hopeful about things turning around this year, there are also plenty of good reasons to take steps to secure your finances. Remember, it certainly never hurts to pad your savings, line up a side income, or pay down debt -- so if you make those moves and the economy does recover swiftly, you'll be in an even stronger place to celebrate that.
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