COVID-19 and Your Well-Being

Source: Image by fernando zhiminaicela from Pixabay

There are many lessons to learn from COVID-19 and impact of the pandemic on families, relationships, jobs, and money. For some who work in the entertainment and restaurant industries, to name just two, it was devastating. For some, especially in the home-improvement industry, it was generally a boom. Some lost jobs, while others maintained their workflow pretty much without a hiccup. It would be difficult, however, to find someone who did not experience some level of trauma, fear, and uncertainty.

However, the looming end of the crisis has left many drained and traumatized by the sheer magnitude of loss, fear, and displacement. The question is: What are you facing now and how do you move forward? Your emotional ability to work through the challenges can be the starting point for rebuilding resilience and trust.

Let me try and put this into an economic context so you may begin to get your arms around your situation and some of the challenges.

Consider unemployment. There’s a vast difference between the statistics and the human cost of job loss. For those impacted, the strain and stress is a huge factor in navigating the impact of losing your job.

“According to the economic projections of the Federal Reserve, the unemployment rate in the US will average 4.5% by the end of 2021 and pursue its fall in 2022 and 2023, reaching 3.8% and 3.5% levels correspondingly.” (Source: US Unemployment Forecast 2021-26). These numbers are down from 2020 levels of almost 7%.

For those whose financial situation was not substantially impacted, you might find that your savings accounts have risen as spending on vacations, dining out, and entertainment dropped to near zero. According to the Economic Research Department of the Federal Reserve Bank of Kansas City, there has been a sharp increase in savings as a percentage of personal income, from 7.2% in December 2019 to a record high of 33.7% in April 2020. These statistics are staggering in a country hooked on spending.

While your immediate reaction may be to let loose and spend, this is a great time to reassess your spending decisions going forward and how much value you place on accumulation to reach your goals and achieve financial security. That is not to say that everyone should lock down their spending and hibernate; not at all. But an honest evaluation of what is meaningful and important in your spend vs save decisions is merited. Again, what you value most should be the guiding light of your spending decisions.

Here are some other factors to consider:

• There is a pent-up demand for travel and entertainment and prices may now be markedly higher.
• Inflation, in food, travel and construction costs, to name a few, has increased significantly from the first quarter to the second in 2021. This should be a warning sign to be mindful of where you put your dollars and a signal that your dollars will not go as far as they did pre-COVID.

The impact of COVID-19 has not been fully realized and probably will not be for many years. Your best bet is to approach your financial life with a keen awareness of where you are emotionally and how you’ve dealt with the pandemic and its effects. “Freaked out” is no place to begin to make financial decisions. You might find that working with a therapist, as well as a financial planner, is helpful in moving forward.

Planning is important. It lays out your critical thinking about your values and time horizons.

Consider these next steps:

1. Think about the impact of COVID-19 on you, your family, your physical and mental well-being, and your finances.
2. Assess where you are now and whether you are moving in the right direction.
3. Work with a team of professionals who have your best interests in mind.
4. Do not underestimate the emotional impact of the pandemic on your thinking and planning for the future.