RALEIGH – As the COVID-19 health crisis dominates the news cycle and the everyday life of American families, concerns are mounting. Our first and primary concern is (and should be) the health and well-being of those in our community and family circles. But, unfortunately, the economic impact of this health crisis will be significant for many, especially those who are financially vulnerable.
With businesses across the country closing down to stop the spread of COVID-19, low and moderate-income earners are feeling the most pressure. Roughly 33.6 million people (24% of U.S. workers,) do not have access to paid sick leave, and only 1/3 of workers have jobs where they can work from home, according to the Bureau of Labor Statistics. This means millions of American families are potentially facing income insecurity.
Those with the lowest paying jobs and the fewest financial resources are often the most vulnerable to poor health outcomes, and more susceptible to the economic impact of a health crisis. Lost income can quickly translate into an increased rate of poverty, food scarcity, and general economic strain on household budgets. Increased healthcare costs because of illness can further impact the financial well-being of millions of American families. With schools closing, many parents face the difficult choice of caring for their children or earning money.
It’s easy to spiral into a cycle of panic when the situation seems so dire. But the news isn’t all grim. We’re seeing more companies every day expanding their sick-leave policies, promising to pay workers who are temporarily unable to work because of mandated closings and offering emergency relief funds to impacted workers. It’s not enough to fix the problem, but it’s a step in the right direction.
The question remains, however, what can individuals and families who are facing a financial crisis do in these trying times? As a veteran of the financial counseling industry, I’ve found some tried and true action steps that can help turn things around.
How to Handle a Financial Crisis
- Recognize that while the circumstances and impact on your family are not your fault, it is your responsibility to take swift action. This is not a time to wait and see what happens. Waiting will only make things more difficult.
- Ask for help. Reach out to professionals that can help you navigate these challenging economic times. Non-profit credit counselors are a great source of help and can help you evaluate your financial situation and look for workable solutions.
- Find Resources to help you address the immediate financial concerns. There are local and state resources you may not be aware of. Your local 211.org is a great place to start looking for community resources that may include everything from food assistance programs to medical expense options, unemployment resources, or even internet resources for those working or learning from home.
- Prioritize the most urgent expenses. Make sure your housing needs, utilities, food, and transportation needs are covered. If you can’t pay some of your bills you’ll want to contact your lenders, creditors, and banks to let them know your financial situation. Inquire whether your creditors have any temporary hardship programs available to help. Many creditors and even mortgage lenders are offering programs and resources for those who have been impacted by the COVID-19 crisis.
Preventing a Financial Crisis
If your family is staying on track financially right now, it’s never too early to prepare for a financial emergency. Here are three things you can do to avoid a financial crisis:
- Make a budget and assess where you are now, as well as where you can cut back and conserve. There are many options for making savings a priority so you develop some cushion for a future economic setback.
- Involve your family in financial planning. Discuss the things you will do as a family to show your family you have a plan. This is especially reassuring to kids who are paying attention to the news and may have concerns you aren’t aware of.
- Track your spending monthly and modify your budget if things change. Keeping a close eye on your spending can help you pivot and adjust quickly if you experience a financial shock.
If you’re amid a serious financial setback, it’s important to know that you aren’t alone and that there is hope. The road to financial recovery has been traveled by many before you. Recovering from a financial crisis can be easier when you know where to look for help. With a solid plan and resolve to stay the course, you can not only regain your financial health, but you can come back even stronger.
If you are experiencing financial difficulty and are looking for a solution, non-profit credit counseling can help you make sense of all your options. Contact a member of the National Foundation for Credit Counseling (NFCC.) The NFCC and its member agencies are here to help. Counselors are available to assist if you are experiencing job loss, temporary loss of income or financial hardship during this time.
About the author
Mike Croxson
Mike Croxson is the CEO of Consumer Education Services Inc. (CESI). With more than 30 years of experience in the financial services industry, Mike’s skills include a particular focus on adapting new technology to meet the needs of consumers struggling with their financial situation.
