The coronavirus pandemic is more than a public health crisis. It’s an economic wrecking ball. For many, recovering from the coronavirus financial impact will be their main concern. Since the first reported cases in the UK in early 2020, COVID-19 has single-handedly wiped out more than £11 trillion of wealth. This induced a global recession, and put many people out of work. Either temporarily or for good.
It’s not yet clear how long it may take for families to get back on their feet financially. However, what we do know from past experience with economic crises that there are steps we can take today to potentially restore our financial wellness faster.
The future of your retirement investments depends on what you do today. Stay calm and avoid making moves based on emotion. Trust your financial representative’s advice to keep your money invested. You must resist the urge to sell in panic, and weather the market volatility.
If you received a stimulus cheque, prioritize paying bills that are immediately due to avoid late fees. Late payments can detrimentally impact your credit score. Check with your service providers. Some are offering temporary, penalty-free payment deferral, which could help you determine where and how to spend your stimulus money
If you need to take money from your 401(k) to make ends meet, many financial representatives suggest you take out a loan rather than a withdrawal. Your employer is responsible for providing you withdrawal and repayment details. The IRS requires 401(k) loans to be repaid within five years. They require that at least quarterly payments are made toward the interest and principal.
If you have a mortgage, student loans, credit card debt or a personal loan, you might consider refinancing your loans. you do this to take advantage of low-interest rates and lower your monthly payments. You’ll need to first complete an application and get a rate quote. Carefully consider the benefits of refinancing against any setbacks. Ensure the math works in your favour.
The full economic impact of COVID-19 won’t be known for some time. However, this won’t be the last financial crisis we’ll face. As you take steps to re cover, it’s important to protect your finances for tomorrow. Start setting aside money in an emergency fund. Financial representatives recommend at least three to six months’ worth of living expenses. Review your investment portfolio with your financial representative. You need to make sure it’s still on course to meet your financial goals. And to see if your portfolio is diversified enough to weather future uncertainty.