How have laws changed over time regarding COVID-19 and income loss? Why?
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Answer:
In the new world, across segments, income has vanished, reduced or has settled at a new low. The risk to income means families have learned to cut back on spending. Saving and investing are in the background as activities that represent a forgotte...
Answer:
New rules of personal finance: How COVID has changed income, spending, saving, investing
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The pillars of household finance—income, spending, saving and investing—have changed.
Synopsis
In the new world, across segments, income has vanished, reduced or has settled at a new low. The risk to income means families have learned to cut back on spending. Saving and investing are in the background as activities that represent a forgotten
-By Uma Shashikant
As we switch from fear to a gradual state of restart and hopefully even recovery, the questions about family finances after Covid-19 are stark. The going is too tough for some families and easy for the fortunate. However, the recast view of income, spending, saving and investing is tough to miss. These four pillars of household financial
Risks to income are the most significant. The migrants struggling to get home have lost their livelihood. It is unclear if they will find work in their villages; it is unknown if there are better times ahead when they will comfortably travel back to cities for jobs. Millions of livelihoods have been wiped out by one pandemic. Our gross insensitivity to the shame of displacing millions without work, food and water, and letting them walk thousands of miles, is a black mark we cannot erase from our collective conscience.
The next rung of wage earners who have made the cities their home are still around, but do not have jobs. Many employers who funded the first month of pay are now reluctant to extend the benevolence. Without economic activity, there is no work and no pay; nor do these households have enough savings to keep going without income. They are surviving on hand loans and pledging the few things they have accumulated.
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Among the more comfortable monthly income earners, many have lost their jobs; many have settled for significant pay cuts, and hope to hold their jobs; and many others are unsure how the work from home situations will extend over time. The children are at home, with no hope of schools reopening. There are no summer camps, day care or play date. Either parent or a family elder must be present to take care of them and supervise their online studies. This reduces hours of work the family can put in outside their home, if restart begins.
Those who ran businesses have no income as the businesses are closed. Stocks remain unsold; bills remain unpaid; without buyers there is no revenue. From big businesses to small ones, there is an unbelievable standstill. No one would have expected to operate, if at all, at single digit capacity. When the first quarter numbers for this financial year come in, despite all expectations, the shock will be unbearable.