COVID-19 has taken a lot from us; travel, impromptu in-person visits with family and friends and freedom to go to a concert, movie theatre or ball game with nary a thought. It has also made many of us anxious and fearful about today and our future and that of our families. While we are getting accustomed to our “new normal,” this pandemic has extended beyond a health crisis into an economic crisis for many. According to recent surveys, half of all Americans say they would experience a serious financial hardship if they were faced with an emergency expense of $1,000 or less in the next 30 days. This is sobering news and spotlights the impact of financial illiteracy among our neighbors and friends. In addition, COVID-19 has laid bare economic and societal problems in the US while increasing awareness of the racial and financial inequality underlying the daily lives of many citizens and, due to this pandemic, these existing problems have been made worse.
These problems are daunting and serious. Historically, every time our country faces a crisis such as COVID-19 or 9/11, the need for greater financial literacy becomes clear. During these uncertain times Americans are faced with difficult financial decisions that will have immediate and long-term impact on their lives. An antidote to financial illiteracy is financial education. While the idea of financial education may seem overly simplistic or “not enough,” it is a start (and a good one). A shift in thinking, well thought-out strategy and action are steps to take to avoid and mitigate this “pandemic” of financial illiteracy.
A few steps will help individuals and families work on their finances during this time of uncertainty:
Start an emergency fund of $1,000-$2,000 or enough to cover six months of living expenses.
Create a budget to review and prioritize financial goals. Cut out any unessential expenses and pay off as much debt as possible.
Focus on what is in your control. We cannot predict or control the market or the daily statistics of the virus but we can control our savings rate and how we react to events.
Financial literacy should be considered a survival skill that everyone needs. My colleagues and I in the Retirement Plan Division within Greenleaf Trust are emphatic about the need for financial education and are a valuable resource to our plan participants especially now. Some of the ways that we help is by acknowledging their situation and showing empathy. Also, providing plan participants, with a sense of control and safety and confirming that they are receiving reliable information is important. These are difficult times and, in the weeks and months ahead, our insights, expertise and empathy will be called upon in ways we never imagined. Let us step up to the challenge and work to support our neighbors and friends.