Difficult economic periods in the country have a significant impact on people and their habits and behavior. One of the most critical periods in the United States of America was the crisis of 2008, which greatly affected the life of society. The main economic consequences of this period were an increase in the number of unemployed and reduced asset values for homes. Thus, these circumstances continue to affect people’s potential to realize their personal wealth objectives.
Based on previous experience with the economic situation in the country, it is possible to identify two concerns that individuals should address in developing their financial plans. Firstly, the financial crisis has shown the need for a financial cushion. Thus, this aspect can provide special assistance in case of deprivation of permanent earnings. Hence, a financial cushion will provide a reduced level of stress due to job deprivation and lack of finances for life. Moreover, the second aspect may be the importance of financial literacy and the ability to save. In other words, individuals should be able to reduce their expenses to meet their basic needs while not feeling the need.
The situation with the COVID-19 pandemic has had an extraordinary economic impact on my personal life. So, I realized the importance of having a financial cushion as part of personal finance. In particular, it was a valuable lesson when laying off or reducing working hours and earnings to reduce companies’ personnel costs. In addition, one of the approaches that should be included in a personal financial plan to address and minimize future risks concerning these concerns may be reducing monthly costs and budgeting. These actions will provide a clearer idea of how much money people need for a living and what free finances they have access to.