MadameNoire Featured Video
1 of 10

economy post coronavirus

Source: pixelfit / Getty

Since the COVID-19 outbreak began, one-third of Americans have had to pull money from savings and retirement accounts in order to pay regular bills; 25 percent of American adults have struggled to make ends meet. While those in the lower-income bracket report the majority of these challenges, one in five middle-income adults has also faced some hurdles in paying bills during this pandemic. Food banks and similar organizations have seen far more takers, too. In fact, 33 percent of Black Americans report having picked up food from a food bank during this time.

Needless to say, these are hard times – some of the hardest our country has seen in a while. It certainly has many Americans rethinking their finances. The way Americans handled financial planning before the pandemic was, rightfully so, for a pre-pandemic world. They didn’t account for a virus wiping out jobs and the economy. And they shouldn’t necessarily have planned for that because pandemics don’t come along often. But now, we have one, and because of it, many have had to make a complete shift in how they handle money. We chatted with Rianka R. Dorsainvil, Co-CEO at 2050 Wealth Partners, about some financial projections for a post-pandemic world.

Rianka Dorsainvil

Source: NA / na

Getting serious about savings

“As uncertain and scary as this year has been, the silver lining is that people are seriously paying attention to important things like strategic planning and saving,” says Dorsainvil. This pandemic may have been a wakeup call for the nearly 70 percent of Americans who had less than $1,000 in savings, and the 45 percent who had zero savings.

economy post coronavirus

Source: Klaus Vedfelt / Getty

We are saving more for winter

Americans have started saving more money since the pandemic, either by happenstance or on purpose. There’s the reality that consumer spending has dropped tremendously due to lack of access to certain retailers, but there’s also the fact that people are intentionally spending less, even when they do have access, out of fear. The average individual savings rate has shot up to 32.2 percent since the beginning of the pandemic. For context, it was just hovering at 12.7 percent in March.

economy post coronavirus

Source: MoMo Productions / Getty

A look at savings by demographics

Whether or not we’re moving forward socially is certainly up for debate today, but we are moving backward financially in many ways. The median household savings for a white family is $51,400, while the average savings for a Black family is $8,600, and that figure for a Hispanic family is $16,700. Average savings grow substantially based on one’s educational level, but of course, we see a major racial gap in college admissions, too, intensifying that financial discrepancy.

economy post coronavirus

Source: Luis Alvarez / Getty

Nobody knows when the storm will pass

“No one has a crystal ball, but with dramatic changes in virtual working and for many, losing income, the old adage of saving for a rainy day has perhaps never been more true,” says Dorsainvil. “It rained A LOT this year, and we still have more storms to endure in the months to come.

economy post coronavirus

Source: Klaus Vedfelt / Getty

There’s no consensus on recovery time

Some experts say that the U.S. economy could take the better part of a decade to recover to its pre-pandemic health. Experts also predict that the state of the US economy after the pandemic will fall into one of three categories: a financial crisis, a recession, or a deep recession (i.e. a depression).

economy post coronavirus

Source: kali9 / Getty

Job recovery is spotty

As of August, the U.S. had only recovered 42 percent of the 22 million jobs lost to the pandemic. The restaurant industry saw the most jobs lost, but then also the most recovered. Some industries, however, may see permanent job loss. Some experts predict that a significant number of jobs in retail, air travel and hotels, non-residential construction, and office and administration, will never return.

economy post coronavirus

Source: SBDIGIT / Getty

People are banking differently

One survey found that nearly a quarter of Americans would be interested in paying a fee for a subscription service that helped them manage their money, specifically with long-term savings in mind. The same survey said that, while many individuals see the pandemic as a one-time risk that won’t repeat, it’s had many others worrying about other rare occurrences that could shock the economy, and they want to plan for those.

economy post coronavirus

Source: Luis Alvarez / Getty

Talk about money

A family that saves together stays together, and Dorsainvil echoes that sentiment. “I think it’s important for families to have real conversations today about their feelings around money and security, and to make a plan to face those challenges head-on. Open and honest communication is essential,” says Dorsainvil.

economy post coronavirus

Source: Delmaine Donson / Getty

Shed the discomfort

To give you some idea of how uncomfortable Americans are discussing finances, 57 percent of adults admit to avoiding the topic with close friends and family. Thirty percent of American adults withhold information about their spending habits from their financial advisor – the very person they’ve enlisted to oversee their finances. Bank account balance was named a top financial matter Americans didn’t enjoy discussing, followed closely by salary.

Future- vs fear-based planning

We pulled this quote from Dorsainvil’s Instagram page. It’s an important notion to bring up because there are many factors scaring young adults away from consulting financial advisors (only about six percent of those between the ages of 18 and 34 do). Many young adults worry that they don’t make enough money to be worth a financial advisor’s time. Many others are members of the gig economy, so they don’t have a solid salary to present to a financial advisor and worry they can’t afford to stash savings into an investment – they feel they must hold onto it in case they can’t make rent one day. But that sort of fear-based thinking can stand in one’s way of long-term financial security that working with a financial investor can bring.


Comment Disclaimer: Comments that contain profane or derogatory language, video links or exceed 200 words will require approval by a moderator before appearing in the comment section. XOXO-MN