As the recession technically still drags on, Allworth Co-CEO Scott Hanson shares some key financial tips everyone should keep in mind - especially those who have been particularly hard hit by the economic downturn: women.
Historically, most recessions hit men hardest because the first business sectors to be impacted are typically construction and manufacturing, which are male-dominated fields.
The COVID-19 downturn is unique, however, in that it’s hit women hardest. And this is threatening to derail many of the professional, financial, and retirement planning gains women have made over the last two decades.
Beginning last spring, while male unemployment rose by about 10%, female unemployment jumped 13%.1 While every demographic was hard hit, because the most heavily-impacted sectors were in-person service occupations related to retail and travel, along with education and healthcare, which are all female dominated, this has resulted in hundreds of thousands more women than men being forced into unemployment.
I’m sorry to say that there are no easy fixes to account for what COVID has financially wrought on America’s female population. However, whether you are retired, still working, or unemployed - no matter what stage you are in - there are some things you can do to lessen the impact of both this and of future downturns on your retirement planning and long-term financial status.
These can help you recover more quickly and get your financial momentum back on track when all this ends.
Cut spending and review your automatic payments
If you’re one of the millions of newly or long-term unemployed women, you might be thinking to yourself, “What extra money do I have to spend?” But after 30 years of advising, whether you’re still in the workforce or you’ve long been retired, one of the things I have learned is that while the basic rules and guidelines for achieving good financial outcomes may be straightforward, they are only effective when judiciously followed.
Most of us benefit from cutting unnecessary or repetitive spending. This means that, whatever you’ve cut to this point, you must try and find additional places to rein it in.
I met with someone (via videoconferencing) recently who had not cancelled her $100 per month gym membership, even though the gym had not been open for almost a year. Another client hadn’t cancelled a yoga membership, meaning the $150 she’s been automatically billed each month for the last 10 months is gone forever.
Research your recurring automatic monthly payments and credit card debits today to eliminate unnecessary expenses. I understand we were initially all hopeful that COVID wouldn’t drag on, but it has. Cancel your memberships, and you’ll almost certainly find a better deal once this is all behind us.
Reinforce your emergency fund
I recall one semester during college that, after paying my tuition, I needed more money to buy my books.
Despite working two jobs, I didn’t have the money that week.
The university I attended offered short-term loans to students, but I remember I first had to provide proof that I had access to other monies before I could get the book loan.
Telling people in the depths of a downturn that they must focus on building up their emergency savings is a bit like that. It may seem counter-intuitive, but if the last year has taught us anything, it’s that, financially, you should always be prepared for the worst.
Because the unfortunate (and lasting) realization of 2020 is that, historically speaking, we were long-overdue for a COVID-type pandemic. And as new strains or new viruses could be a part of our existence for years to come, because we don’t know what’s ahead, for those with income or means, you need to have at least three to six months’ worth of expenses in your emergency fund.
This is liquid cash that can cover you against whatever comes your way for up to half a year.
Professionally, COVID could help create your opportunity for faster career advancement
After nearly a year of working from home, many of us have gotten a little casual about our presentations during videoconferencing meetings. The lockdowns may or may not be nearing an end, but if I were a personal coach? I’d encourage you to finish this (hopefully) final stretch up strong.
Here’s why.
Some economists believe that the pent-up spending demand is going to result in both a rapid and a robust economic recovery when everything fully reopens.
Over the last year, even many companies that have continued to thrive during the pandemic have cut staff. This may represent an increase in opportunities for advancement once things open back up.
If you’re retired, this may not affect you. But for those women still in the workforce, I recommend you position yourself now for a possible uptick. And if you’re unemployed or underemployed? Take this time to take additional educational courses and receive training, and to perfect your resume.
For those still employed and working from home, while it’s difficult to not allow our personal surroundings to “bleed” into videoconference meetings, focus on being the outlier. Dress for success and come prepared. Meet with your supervisor to let them know that the last year has led you to gain a sense of clarity about what you want from your career, and from the company.
If you want a larger role, and more money, now may be a surprisingly good time to position yourself for it.
When it comes to women, especially single women and mothers, your careers and retirement and investment planning are very different from men’s. (For one, longer lifespans require that you save more money.)
Make sure your advisor, and any personal financial planning you engage in, takes this into consideration.
1 https://www.kiplinger.com/business/small-business/women-in-business/601682/the-pandemic-has-hit-women-hard-6-tips-to-bounce
