The world is under the grasp of a murderous virus that is beyond any of our imagination. It has disrupted everyone’s life, destroyed numerous businesses and took hundreds thousands of lives. The virus not only cause massive disruptions in everyone’s life, it also reveals an unfortunate truth of majority of citizens around the world – a lot of people are not able to face the virus financially.
I remember reading an article from Time magazine several years ago that we were about to fight a losing war against superbug. While I can’t recall the exact date when I read the magazine, but it clearly stated several reasons why we were on the brink of disaster. Fast forward several years the Walking Dead TV series became one of the most watched drama on cable. The show’s premise is that there was a super virus that would kill the humans but left the cadaver intact; the virus would take over the hosts and make them into killing machines. I remember thinking to myself that this would never happen in this world because we have the technology and medical know how to prevent such disaster. And I was wrong.
Obviously the world did not fill with zombies but the virus did bring the world down to its knees. Medical institutions are overwhelmed and all medical staff are overworked. Economies around the world stopped functioning and all citizens are fearful of the infection. What people did not realize was how deep the virus has impact on their finances. A lot of people lost their jobs and many are not able to sustain their basic needs such as food and shelter. The question is why did this happen and is this preventable?
I have no intention to help solve this world problem but to make an argument that some of this could be prevented if people are more aware of their financial standings. Additionally, a good strong background in education is a must if someone wants to have a sustainable income. I am very sure this argument will invite a lot of criticism – however based on what I have observed and personal experience having a good education is extremely important. Let’s discuss the flaws and what are some of the solutions.
Lack of Savings
The savings I am referring to refers to availability of fluid assets that can be converted to cash quickly. I am not referring to the money saved in a saving account or any assets that can be used when there is a need for them. For example, this could be asset in any bank accounts and in equity such as stocks can be sold and obtain cash. Credit cards and line of equity are not considered as asset as they are liabilities.
When the pandemic hit a lot of people believed that the lock down was only temporary. However, as time dragged on the infection rate did not let up and more and more countries were impacted. Businesses began to shut down and a lot of local stores lost a lot of businesses. The immediate impact was many people lost their jobs. There were multiple articles with alarming concerns that many Americans do not save enough to be able to meet such dire consequences. New York post recently published and article that states one in four Americans do not have savings account at all. A CNBC article pointed out that one in three raids their retirement savings or stopped contributing to the retirement savings.
This has considerable long term impact on one finances. Not only it forces everyone to think of short term needs, the pandemic totally destroyed any long term outlook such as retirement savings. Some Americans still rely on Social Security to provide retirement income when they retire. However, the Social Security coffer is expected to run out of funds in 2035. There is even talks that it may run out in 3 years. Majority of Americans will not expect to see any retirement funds when they retire. Thus it is extremely important for all of us to invest in other retirement savings such as 401K or IRA.
What is the possible solution to such a predicament? There is no silver bullet answer. The best possible solution is everyone should plan their finances accordingly. For decades we are the “spend” culture. With availability of credit cards or plastic money, they have exacerbate the problem. More and more Americans are in debt and some have even file for personal bankruptcies. It is important that everyone examine their finances thoroughly and determine if any purchases can be put off. Financial planning involves placing saving in retirement and savings as priority and place purchasing big-ticket items as secondary (i.e. the new iPhones and new car can wait). This subject is an important but remain elusive for a lot of Americans. I touched on this subject in my posts earlier.
Education is Important
When the pandemic hit most hourly wage workers were impacted the most than salaried workers. Companies are less likely to stop employing hourly workers when the economy is bad to reduce cost. This is particularly true for blue collar workers where they tend to be let go. Examples such as restaurant workers or part time workers. The least impacted are white collar workers where their expertise remain in high demand.
Another example that I can provide is more close to heart. My wife is a Zumba instructor and she gets paid by the hour at my town’s fitness center. She was immediately placed on leave and lost all the hours as all fitness centers were shut down. Another great example is my brother-in-law who live in another country. All of them are in their 60s and suffered considerable damage as their businesses evaporated. Now they have to look for other sources of income such as direct sales to make end meets. In discussing this with my wife about her brothers, I discovered that most of them never graduated from high school and no one had advance degree.
As I observed the unfortunate events of people losing their jobs, I realized that some of them do not have proper education or they never had the opportunity to obtain a higher degree. Having an education will allow better opportunities when it comes to securing a stable job. Education not only open more doors it also allow better career advancement. As an example, a college educated person is more likely to secure a six figure job in an accounting firm than a high school drop out. Having worked professionally in the financial industry for over 20 years, I also noticed that employees are more driven to pursue advancement and increase their financial standings. Hourly wage employees only care about completing the task at hand and getting paid.
Obviously well educated population did not avoid the damage from the pandemic unscathed. There were quite a number of workers were laid off as some of the companies were not able to sustain the businesses. As the economy starts to pick up again, these workers are likely to land on their feet faster than hourly workers.
Personally I considered myself lucky and blessed as my family is safe during the pandemic. Additionally, I never resorted to go through my savings as I am quite discipline in ensuring there is a safety net in case if I am out of job. Finally, I continue to improve myself through continuous training at work and ensuring I am adding value to the company that I work for. That continues to prove useful as my company values my contribution (what’s better way to be paid to work remotely?). The pandemic thought me one important lesson – having a financial plan is extremely important. My children is experiencing the pandemic first hand and it also showed them they need to have financial resiliency as they are going into the adulthood. To begin, they understand the importance of having good education.