The coronavirus, AKA COVID-19, might be more life-threatening to the those who least suspect and the old but the life implications might just kill the financial lives of a wide swath of people.
Year-after-year the warnings come out about how much people save for an emergency. The results are never good. Bankrate reported in 2019 that nearly 3 in 10 people have absolutely no emergency savings.
And here we are at the start of a very dangerous medical situation that may actually lead to people being off of work, either due to economic conditions or quarantine.
With the number of cases doubling every four days, the impact of COVID-19 can be explosive.
People in denial about the impact of COVID-19 may be adequately protected with emergency savings, good health insurance, and paid time off of work. But those of us who work in hourly paid jobs are at a very high risk of having finances slaughtered by this virus.
The impact of having adequate emergency savings versus those people without savings can lead to being more likely to not fill prescriptions, have utilities disconnected or have to cut back on food.
So how do the 30 percent of people unprepared for a coronavirus financial impact plan to make ends meet? Well, they plan to turn to creditors and friends to help fill the void. Those actions will lead to more debt and future financial obligations.
As you can imagine, the lower the household income, the lower the chances are of being able to get access to money to tie one over an illness or job outage due to the illness. But even households with higher incomes and middle-class families are not doing great.
While the trend since 2000 was positive, the 2008 recession caused a big hit and the last reported data is not wonderful.
2008 Great Recession Hit
“Recent Federal Reserve data show that, with the exception of the top 10 percent of earners, all households saw their net worth decline meaningfully between 2007 and 2010 during the Great Recession. While median net worth declined nearly 40 percent between 2007 and 2010 across all households, younger, non-college educated, and non-white households lost the greatest proportion of their wealth and have experienced the weakest post-recession recovery. Meanwhile, households indicated in 2010 that acquiring liquidity was their top saving priority, even though the number of families reporting having at least $3,000 in liquid savings dropped to 48 percent in 2010 from 53 percent in 2007.” – Source
Coronavirus Personal Finance Hit
Think about the number of people who are employed in food service, nursing, senior care, assembly lines, public transportation, and other lower-paying jobs that put people at personal risk of a viral financial impact. It is a lot.
People in those jobs might find themselves more easily exposed to someone who may become sick.
The Center for Disease Control (CDC) advises people to stay home when they become ill. They also advise staying about six feet away from people but we know that is unlikely.
As it stands now, people who have been exposed to someone suspected of having the coronavirus or have come in contact with people from high-risk countries are told to self-quarantine. This means not going to work, classes, athletic events, or other social gatherings until 14 days later. – Source
A two week period without income will financially crush so many individuals and families.
And to bring this all back around, as you can see, those of us who are least able to afford the financial hit from a COVID-19 outbreak are the same people who can least afford an income interruption.
As I’m finishing this article, the World Health Organization has stated the coronavirus outbreak is now a pandemic. That means the virus is unlikely to be controlled, many will be impacted by it, and it is fully expected to spread across large areas.