Why COVID Makes You More Vulnerable to Money Problems

The coronavirus pandemic is changing the rules of socialization and personal interactions. Many people who used to work in close cooperation with co-workers and managers in an office have discovered that remote working arrangements enable them to safely fulfill the same tasks from home. In the long term, we can expect the business environment to be changed as a result. Professionals now have proven they don’t need to work from the office to be efficient. 

But it would be unfair to claim that COVID-19 has only moved the office into the household. In reality, the pandemic has driven a lot of dramatic transformations that have left citizens worse off. COVID-19 is more than a health threat. It is also a financial risk for all. 

Because It Cuts Down Your Income 

For a lot of professionals, the pandemic has been synonymous with income loss. Whether you’ve been furloughed on a lower pay or made unemployed, managing living costs when you can’t rely on your income is a delicate challenge. Freelancers, who are used to income fluctuations, have also faced dramatic drops in activities.

For anyone who didn’t have sufficient savings to cover for the first few months of unemployment or lower reduced activities, expenses can get out of control. As a result, you might find yourself facing debts. You may want to tackle the situation as rapidly as possible and evaluate your options: Is debt consolidation a good idea or should you focus on debt settlement instead?

Before making your choice, make sure to assess how much you are able to pay now and how you expect your income situation to evolve in the near future. In many cases, debt relief programs can be more effective than consolidation loans or settlement strategies. 

Because It Changes Demands and Costs 

Most households get in the habit of tracking their expenses to create a frugal budget. But, the pandemic affects your budget calculations dramatically. Indeed, creating a strict budget to manage costs relies on one fact: Costs don’t change. What do you do when indispensable items and services become more expensive, such as the cost of toilet paper during the pandemic? In some countries, toilet paper has gone through an almost 70% increase in price in one month. It’s impossible for someone working on a tight budget to face new challenges without creating a financial deficit. 

Because You’re Craving Comfort 

Staying at home for a prolonged period can affect your mood. You can experience a vitamin D deficiency, which, combined with the loneliness of self-isolation policies, can make you crave comfort purchases. Emotionally motivated purchases put your finances at risk, but they help maintain your mental health. 

Because Your Habits Are Changing

The pandemic is forcing people to buy items they never needed before. The demand for face masks and hand sanitizers has increased dramatically. Additionally, because people have to find ways of creating a home-based alternative for their day-to-day routine, many are forced to make further purchases. Equipping your home gym or your home office, for instance, is a no-brainer. Loungewear orders have skyrocketed in lockdown for the same reasons. 

COVID-19 is likely to affect the global economy dramatically. Fluctuating incomes, high costs, and changing needs are driving people to unavoidable debts all around the world. We can only hope that our leaders will learn the lesson from the pandemic and help rebuild a stronger and safer economy for all. 

2020 Kimberly Signature

 

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