Americans evaluating financial habits in wake of COVID-19 pandemic
The COVID-19 pandemic has severely impacted people in many ways, including job losses, health concerns, and financial struggles. These difficulties have led many Americans to reevaluate how they view savings and spending.
Most Americans struggle to save money
Just six months ago, when the economy was much stronger, Americans struggled to save money, reported GOBankingRates in December 2019. Their annual surveys found in 2018, 58% of those surveyed said they had less than $1,000 in their savings accounts, but that percentage increased to 69% in 2019, indicating a growing percentage of Americans have little to no savings. A few months later, Motley Fool reported 39% of Americans lacked the savings to cover an unplanned expense of $400. Many people said they had no savings because they lived paycheck to paycheck which made it hard to save.
More Americans plan to save money post-pandemic
In the wake of the pandemic, 75% of Americans say they “plan to take financial action after the pandemic ends,” according to a recent survey commissioned by NerdWallet and conducted by The Harris Poll. The survey, comprised of over 2,000 U.S. adults, asked participants how the coronavirus pandemic affected their finances.
- 38% of those surveyed plans to put more money in their emergency funds.
- 37% of survey participants said they plan to spend less money on nonessentials.
- Roughly 50% of Gen Z’ers and Millennials say they’re saving more than they did pre-pandemic.
- Gen X’ers (39%) and Baby Boomers (29%) say they’re saving more than they did before COVID-19.
Overall, the NerdWallet survey seems to indicate people are looking to significantly change their financial situations once the pandemic passes. Additionally, according to these statistics, many have spent more money during the pandemic; it appears people may be looking to reverse spending levels as well to focus on saving money.
What can people do to improve their financial standing?
Consumers carrying high credit card debt, along with other types of short-term debts, are historically more likely to struggle with savings. However, even if financial resources are limited, there are steps people can take to improve their financial standing.
- Establish a budget and carefully track income and expenses.
- Look for ways to cut unnecessary spending.
- Set an affordable goal amount to dedicate to savings. (For example, if $10 or $20 a month is saved, over time this will add up.)
- Pay down credit card debt by paying more than the minimum amount. (Paying the minimum makes it difficult to become debt-free because interest payments continue to add to the overall debt.)
- Check your credit score and, if it’s a little on the low side, look for ways to improve it.
The primary goal is to create a plan to determine the best way to reach financial goals. Even if the steps are small, over time, much can be accomplished.
If you are one of the millions of Americans who have decided to make some financial changes to safeguard yourself in the future from economic disasters, PRBC can help. Our alternative credit score process helps people improve their credit standing, empowering them to have access to credit and better loan terms. To learn more about our services contact us today.