The U.S. economy could remain sluggish well into 2021 and possibly beyond. Here’s what to do to prepare.
Coronavirus vaccines are finally becoming available slowly but surely, and health experts predict that the general public should be eligible to vaccinate this spring. Hopefully, once enough people have received the vaccine, the outbreak will subside and, in time, life should return to normal.
But where is the US economy? While certain restrictions – such as restaurant capacity within restaurants – can be lifted once the pandemic eases its grip, it can 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 until the end of this year, or possibly beyond, in a meaningful way. If you are concerned about how this could affect you, there are a few important steps you should take.
1. Increase your emergency fund
In times of economic hardship, having extra cash in a savings account really helps. If you have cash in an emergency fund but could need more, now is a good time to top up that account. You may have managed to slump away three months of living expenses, but you would be more comfortable having four or five months on hand in case you lose your job. If you’re naturally saving some money during the pandemic from not commuting, eating out, or socializing, put the money in the bank so it is there for you when you need it.
2. Get an extra income
Losing your job is a frightening prospect, but unfortunately, unemployment was rife 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, consider getting some sideline activity, whether it’s doing a telemarketing gig, doing a web design job, or selling homemade hats and scarves. This way you get a backup if your main source of income goes away. Keep in mind that if you lose your job and are eligible for unemployment benefits, it may not happen right away, so a side gig in the meantime can help bring in some cash.
3. Pay off expensive debts
If the economy doesn’t improve this year and you lose your job, the last thing you want is costly debt hanging over you as you try to keep up with your spending. Because of this, now is a good time to start paying off unhealthy debts like your credit card balances. If you owe money on multiple cards, consider making a wire transfer to move your various balances to a single card with a lower interest rate. (You can even qualify for a 0% adoption rate.)
Without a crystal ball, it’s impossible to predict when the economy will recover. While there is reason to hope that things will change this year, there are also many good reasons to take steps to keep your finances secure. Remember, it certainly never hurts to replenish your savings, make an extra income, or pay off debts. So if you take these steps and the economy recovers quickly, you are in an even stronger place to celebrate.