Over the past week, amid the coronavirus pandemic, we've interviewed a half dozen finance professionals to get the best advice on how to overcome the financial fears many are facing right now.
“A lot of people are scared,” said Kelly Lannan, with Fidelity Investments.
Along the way, we asked every one of the experts if they thought the U.S. economy was heading toward a recession?
“Yes, yes we are,” said Eveyln Zohlen, with the Financial Planning Association.
“I don’t think there’s any avoiding a recession if we’re not already in one,” said Todd McCracken, with the National Small Business Association.
Every expert agreed this current downturn will likely lead us into a recession. So, they caution us to expect higher unemployment in the weeks and months to come, along with the chance that you could be laid off or see a decrease in work and wages. The caution is not meant to send you into a panic, but help you plan.
“This is an opportunity to take a look at your discretionary spending, evaluate what is important and carve out for now what is isn’t,” said Zohlen.
Add the money saved, by cutting down discretionary spending, to an already existing or new emergency fund. Ideally, that fund should be able cover three to six months of essential expenses. However, if you can’t save a full three to six month of expense, just remember any money put in saving now will help you down the line.
In addition, the professionals are also advising those who expect an tax refund this year, file immediately even though the federal government has pushed back the filing deadline.
Last, take advantage, if you qualify, of the expanded unemployment and paid leave benefits that were recently passed by Congress.
“Use the money that is available to you, pride has no place here,” said Labor and Employment Lawyer Jon Hyman. “Tap into those resources, there is no shame in apply for unemployment.”
This expected economic recession like all those in the past, shouldn’t last forever. In fact, most economist and analyst believe we should see a much faster recovery than with the 2008 great recession.
“Back in 2007, we had some real issues with the financial system and the banking system, which led us into a recession and that is what needed to be fixed. Right now, everyone is just voluntarily stopping to consume,” said Robert Stammers with the CFA Institute. “If everyone is really good about doing what needs to be done for this health crisis and it’s shorter in nature and it could be coming back into things as usual.”
“We can turn this around this year, I still think there’s real hope for that,” added McCracken.