genesis domain was triggered too early. This is usually an indicator for some code in the plugin or theme running too early. Translations should be loaded at the init action or later. Please see Debugging in WordPress for more information. (This message was added in version 6.7.0.) in /services/webpages/f/i/financialpsychologycenter.com/public/wp-includes/functions.php on line 6114(Forbes) –\u00a0Americans say they\u2019re saving money. Retail spending is up. Low interest rates have sparked the\u00a0housing market<\/a>\u00a0and the stock market has rebounded from its initial pandemic dive.<\/p>\n But how does any of this make sense when so many people are struggling financially months into the Covid-19 crisis and the recession that came with it? The unemployment rate is high, unemployment assistance is about to expire again in some states, overall consumer spending is down and\u00a0mortgage delinquencies<\/a>\u00a0are on the rise.<\/p>\n The reason is what\u2019s expected to be a K-shaped economic recovery, which disproportionately impacts different segments of the economy. Even now, more than six months into the pandemic, some households\u2019 finances are largely untouched, while others are looking at a long and arduous recovery.<\/p>\n For many, weathering what has become a longer-term financial storm will require more than just an emergency fund. An individual\u2019s financial issues are so closely tied to the state of their mental health, and the ongoing stresses of the coronavirus pandemic are well documented.<\/p>\n While you cannot predict how\u2014or when\u2014the American economy will recover from this period, you can take some time to reframe how you think about your finances on an emotional level.<\/p>\n Here\u2019s what you need to know about protecting your finances and your mental well-being during these uncertain times.<\/p>\n An economic downturn and its eventual recovery can take\u00a0many shapes<\/a>. You may have heard of a V-shaped or U-shaped recovery. But one thing these often-referenced shapes have in common is that widespread financial challenges usually are met with widespread recovery, albeit by various degrees for individuals.<\/p>\n A K-shaped recovery, however, sees two groups diverging from an economic turning point, instead of tracking a single curve of decline and recovery. More affluent individuals see their situation as stable or improving during a downturn\u2014they\u2019re the upper portion of the K\u2014while others experience devastating losses.<\/p>\n There are signs that this is happening now during the Covid-19 crisis.<\/p>\n People earning between $25,000 and $35,000 were nearly three and a half times more likely to report having a \u201cvery difficult\u201d time paying for usual household expenses than those earning between $100,000 and $150,000 per year, according to a late-August survey by the Census Bureau.<\/p>\n Take the hospitality and leisure sectors for example, explains Brian Kench, dean of the Pompea College of Business at the University of New Haven. \u201cOnly about half of lost jobs have come back,\u201d in those sectors, he says, due to continuing virus concerns.<\/p>\n Benefits designed to stabilize people who haven\u2019t been able to return to work or find new employment\u2014if they have been able to access those funds\u2014are likely to run out. The grim employment outlook plus strained finances compounds the recovery process for these individuals.<\/p>\n \u201cThe lower part of the K feels like it\u2019s sliding even deeper,\u201d Kench says.<\/p>\n If you have large swaths of people who can\u2019t earn money to pay their bills and make purchases, it\u2019s going to take longer for the economy as a whole to show vast improvements, even if there are a lot of people who are doing relatively well.<\/p>\n And for many people, the impact of that slower recovery track can have long-term effects on their ability to earn and amass wealth.<\/p>\n A recent survey found<\/a>\u00a0that households of color face a more challenging financial landscape than their white counterparts, often with less access to aid programs like the Economic Impact Payments, popularly known as the stimulus checks, authorized by the CARES Act.<\/p>\n Households of color were still trying to regain ground from the last financial crisis before the coronavirus pandemic came along. Income for Black households didn\u2019t surpass 2007 levels until 2019, according to new Census Bureau data on income and poverty.<\/p>\n \u201cBut that\u2019s already old news,\u201d said Valerie Wilson, director of the Economic Policy Institute\u2019s Program on Race, Ethnicity, and the Economy, during a presentation this week. \u201cThe impact of the pandemic and the recession has had a disproportionate impact on Black workers and their families,\u201d Wilson explained.<\/p>\n Recognizing a K-shaped recovery can help acknowledge that not every part of the economy recovers at the same pace. Much of the process is ultimately felt at a personal level.<\/p>\n \u201cA lot of industries are going to be hard hit for an extended period of time,\u201d says Leigh Phillips, CEO of financial technology nonprofit SaverLife. \u201cSchools aren\u2019t back, childcare is not back and that obviously impacts a lot of families.\u201d<\/p>\n Almost 90% of users of SaverLife\u2019s financial education platform\u2014who tend to earn about $25,000 per year\u2014have reported a loss of income due to the pandemic.<\/p>\n \u201cBut that loss of income has been paired with simultaneous increased spending,\u201d Phillips says. Households who weren\u2019t already set up for remote work or online learning had to figure out how to cover the costs of internet access or devices, she explains.<\/p>\n And families who may have had their\u00a0grocery costs<\/a>\u00a0supplemented by school meal programs may suddenly have been faced with the need to provide three meals a day at home, during a time when food costs increased, Phillips says. \u201cEven for people who receive supplements from the government to pay for food, we\u2019re still seeing much higher spending in that category,\u201d she says.<\/p>\n SaverLife has been encouraging members to claim their\u00a0stimulus checks<\/a>\u00a0or\u00a0unemployment benefits<\/a>\u00a0if they haven\u2019t already, along with pointing them to food assistance programs in their areas. The organization also partners with financial coaching programs around the country to help users work with their creditors.<\/p>\n But taking those first steps to access help can be challenging, especially since some of the initial shock of the pandemic\u2019s economic impact has dulled.<\/p>\n \u201cPeople don\u2019t necessarily want to confront some of these issues right now,\u201d Phillips says. \u201cThey\u2019re frightening. But the more that you can [do to] get all the assistance you can, the better off your family\u2019s going to be.\u201d<\/p>\nWhat Is a K-Shaped Recovery?<\/h2>\n
Impact of Uneven Recovery Felt on Individual Scale<\/h2>\n
How to Cope With Longer Periods of Financial Strain<\/h2>\n