While the COVID-19 virus is spreading across the globe, the new economic crisis is already not the blurry future but our harsh reality. The economic activity experiences a massive contraction in various countries which will lead to unpleasant consequences for common people and small businesses. Many people have been living paycheck to paycheck trying to manage their finances and be financially fit.
These days, the situation is predicted to be even worse for millions of workers due to cut hours and frequent layoffs. This is just the beginning so it’s essential to minimize our spending and learn how to save our funds during the COVID-19 financial crisis in 2020. Many people turned to cash advance during hard times even before the crisis, but today this lending option seems to be one of the most obvious solutions for people to need to make ends meet and pay the bills. Learn what else you can do to survive and stay financially afloat.
Current Economic Situation
The last huge financial crisis was in 2008 when plenty of small businesses have shut that resulted in growing unemployment rates. Nowadays, as the new virus spreads across the globe rapidly no one could predict how things will go. However, it is quite obvious that the present economic crisis is even worse than ever. It affects whole countries, small businesses, and ordinary people.
Many countries have already out restrictions and limited the number of enterprises that may continue working. The majority of businesses have closed and those who can perform their services remotely have sent their workers to work from home. Such small businesses as cafes, restaurants, movie theatres, photo booths, gyms, venue areas, and other public places have been closed due to public health concerns. As a result, entrepreneurs face difficulties with paying salaries, rent and other necessary bills during this crisis.
Understanding the Reality
If you are reading this you may be one of those socially vulnerable people who also face job loss or other monetary issues at the moment. While small businesses were among the top enterprises providing economic growth and jobs to the local communities across the world, we all are experiencing the impact of COVID-19 as our close friends and family members lose their permanent jobs and aren’t sure they will save their positions.
Some people have been cut hours while others had to stay home with their kids due to school closing. Large organizations like Apple, Amazon, Facebook, Google, Twitter and Microsoft who have hourly workers have claimed that they will keep paying them their salaries during the quarantine. Disney has also shut its hotels and theme parks but said to keep on paying its 43,000 workers until the end of March even if they stay at home.
Other smaller companies are pledging to continue paying the wages for a couple of weeks as well but it won’t help a lot. People are already suffering while many of them can’t afford to pay the bills, buy groceries or make the necessary purchases. Small business owners also need to pay for rent, utilities, wages, etc. As a result, economists believe the unemployment rate will drastically increase in many countries during the second quarter of this year.
How Can We Save Our Finances?
- Separate Your Needs and Wants
The first thing to keep in mind is that there is no need to panic. We all suffer the same monetary disruptions and many consumers don’t even have enough savings to pay $400 of urgent expenditures, economists say. Thus, it’s important to prioritize your costs and concentrate on the most essential expenditures such as utilities, buying groceries, paying rent or mortgage.
- Look for Government Help
Another thing to do is search for government help and Crowdfunding organizations where you may obtain some monetary aid during these challenging times. Many countries offer small financial help for low-income households or provide mortgage and loan deferral. You may look for special offers from various organizations or ask to postpone your rent payments if you are a small business owner.
- Entrepreneurs During Quarantine
While big enterprises can send their workers to work remotely from home, small businesses can’t afford to stay without income for a long time. As almost all citizens are told to stay home these days, such services as restaurants, travel agents, gyms, movie theatres, etc. are experiencing financial losses due to quarantine and public health issues. Some entrepreneurs face the need to take out new loans to stay financially afloat. Otherwise, they won’t be able to pay for rent and other expenses.
Alternative Lending Options
While traditional banks and credit unions have also closed down for the quarantine and conduct the limited number of services, alternative lending remains the only option for people who need to solve urgent monetary disruptions. Such services are on the rise and they are performed online without the need to go out. The requests can be done from the comfort of your home and the cash will be delivered to the checking account of the borrower. As a result, people may pay their bills or purchase groceries while staying at home with their families.
Minimize the Damage
All in all, we are just at the beginning of the unknown and nobody knows for sure how long the current financial crisis will take. It is obvious that common workers and small business owners are the two main categories of people who will suffer the most during the COVID-19 pandemic. As small companies shut down for quarantine workers lose their wages and have to stay home while having no money to pay for their needs.
The unemployment rate will rapidly grow all over the world leading to more instability and financial losses. Small business owners have no clients and don’t have the funds to keep paying for rent or expand their business. So, the entrepreneurs can either take out small business loans to help them survive or lose their money. We don’t know how long the current recession will be but minimizing your expenditures or using your savings can help to stay financially fit. Alternative lending may help in case you don’t have a cash cushion to help your family survive.
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