The coronavirus outbreak is on a surefire path to severe economic consequences. The effects of this issue are damaging to the global economy, and consequently affecting the personal finances of individuals everywhere. There has been some decline in the numbers of people infected by the virus, but it is too early to say if this pattern will continue. While China is the most severely affected by this issue, the economic downfall is spreading worldwide.
From stock market investments to shortages of essential products, here are 8 ways the coronavirus will impact your finances:
Stock market downturn
With decreases in sales and the overall volatility of stocks right now, this market downturn will obviously impact your finances. Some financial analysts believe this situation could soon mimic that of the 2008 financial crisis. Despite the market decline, most financial experts are saying it is too risky (and early) to change your investment plans. If you’re looking to invest, pick stocks that are not as affected by global affairs.
Bank of Canada lowered their prime rate
One of the most significant ways coronavirus will impact your finances is the lowered rates from Bank of Canada. The bank cut its lending rate to 0.75 per cent. This is its largest cut since 2009. More rate cuts are potentially on the way as well. Of course, this means lowered interest rates on savings. And many people are rushing to change their savings methods as the stress of this crisis ensues. However, disrupting your own savings is also a risky move during this volatile time in the economy.
Cancelled events and conferences
With plenty of events and conferences being cancelled to preserve the safety of both attendees and businesses, companies are losing potential sales. Presently, it seems to be tech conferences that have been most frequently cancelled.
Here’s a list of some of the conferences and events that have been cancelled already:
- SXSW in Austin, Texas
- Facebook Global Marketing Summit in San Francisco
- Shopify’s Developer Conference, Unite, in Toronto
- EmTech, Asia in Singapore
- The women’s world hockey championship in Halifax
Apple, McDonald’s, Starbucks, and Amazon are among the businesses closing some of their facilities and limiting their services due to the outbreak. Companies are taking extreme caution when it comes to any illness in the workplace.
Regardless of what it is, if someone is sick they must work from home if they can. Using e-mail and phone to communicate, and holding conferences and meetings over video chat are means that some companies are taking to ensure the health and safety of employees. These modes of working can quickly translate to lost money. Depending on your employers’ sick day policies and your personal work style, workplace disruptions can quickly impact your finances.
Tourism is at a standstill
Out of concern for spreading coronavirus, many health officials are suggesting people abstain from traveling, or at least suggesting diligent research in choosing your destination and the means by which you will get there.
Some people who were mid-travel have been quarantined out of protection. A cruise ship, The Grand Princess, with 3,500 passengers and crew has been held at the coast of San Francisco until it is deemed safe for them to continue on their way. Many similar situations are occurring along with this. The loss of Chinese tourism has led Las Vegas to raise their resort fees drastically. Consequently, they’ve lost business.
Overall, those unable to reach their destination are likely to lose money due to loss of work. And the travel industry as a whole is struggling to maintain their standing amidst these issues.
Product shortages and consumer prices
If you haven’t heard already, the world has a toilet paper shortage on their hands. Australia, Singapore, Canada, Hong Kong, and the U.S. are among the places in the world that are experiencing these extreme product shortages.
Supply chain and trade route disruptions, plus apocalyptic mindsets, are instilling fear and panic in everyone leading them to over-stock on supplies. Tissues, flu masks, hand sanitizer, and soap are among the products disappearing from store shelves quickly.
Many people are over-spending on these things that they may not even need. This is why you need an emergency fund of stuff. A 3 month stash of personal and household goods can prepare you for these kinds of situations. And it can prevent you from spending money unnecessarily out of panic.
A cash emergency fund is an important essential too, and your “stuff” emergency fund will ultimately make it last longer, leaving you more prepared. You should open a High Interest Savings Account ASAP so you can have spare funds for situations like this.This emergency fund will also help you amidst the drastic price hikes on essential items that are happening both online and in stores.
Mortgage rates are falling
Depending on your circumstances, this will affect you differently. Anyone whose mortgage rate is maturing this year or has a floating rate, can benefit from these circumstances. For those who are looking to buy a home, now would be a good time to do so as well. Unfortunately if your mortgage has a fixed rate you won’t benefit from the rates lowering.
Central banks are lowering interest to cushion the economic blow of the coronavirus’ financial impact. This ultimately means that while some may benefit from this, if a recession occurs the issue remains difficult for anyone to manage.
Coronavirus and the environment
The drop in economic activity worldwide has led to a drop in greenhouse gas emissions. Less consumerism and stalling the production of a variety of goods inevitably leads to better environmental impacts. However, this brief moment of relief for the earth is not bound to last once coronavirus has run its course. The inevitable return to the climate crisis will bring us right back to where we started. But, you can take this in between time to make yourself financially prepared for the climate crisis.
How can you prepare for a crisis while it’s happening?
I guess, truthfully, you can’t. But, you can make the best of the situation by being aware of how the spreading of coronavirus and its subsequent economic impacts will or could affect you as an individual.
Stay aware of the news, but also remember that, on a global scale, dealing with an issue like this is much different than how you need to deal with it as an individual. It is always smart to develop a stock of items for emergencies as well as an emergency fund to cushion you in times such as these. But don’t let the worldwide management of this issue cloud your judgement in regard to how you should be managing your personal finances.