Survey: Pandemic Devastates Americans’ Finances – but Bolsters Financial Acumen
COVID-19 has changed how we think about money, says HerMoney and Debt.com.
FORT LAUDERDALE, Fla., January 12, 2021– COVID-19 might have permanently changed how an entire generation thinks about spending, saving, and debt – and in ways that might offer a silver lining to a devastating pandemic, says Jean Chatzky, best-selling author and CEO of HerMoney.com.
HerMoney partnered with Debt.com and polled more than 1,000 working Americans about their financial habits as the pandemic dragged on into December. The results were surprising and profound:
While most Americans do not have an emergency fund, more than 8 in 10 of those who lost money due to the pandemic told HerMoney and Debt.com, “I now realize how important it is to save money for emergencies.”
Credit card debt has long topped $1 trillion in this country and was trending up before the pandemic, but the survey shows nearly 1 in 5 people say, “I’m paying more attention to the interest rates on my credit cards.”
Nearly 1 out of 5 now rethink how they make large purchases, saying they’re more willing to buy used cars and other pre-owned big-ticket items.
A quarter of American adults have nothing saved for retirement, according to the U.S. Federal Reserve, but only around 15 percent of survey respondents reported, “I’m not ignoring retirement savings like I once did.”
Both Chatzky and Debt.com chairman Howard Dvorkin, CPA are surprised by the results and hopeful for a post-pandemic financial future.
“I’ve spent the better part of my professional life convincing Americans to stop running up debts,” Chatzky says. “That’s a hard argument to make when times are good. Even the Great Recession had only a temporary effect on spending, but this time seems very, very different. Maybe this will prove to be the silver lining from this awful time.”
Other survey findings:
- Over 34 percent of respondents lost at least a quarter of their household income
- Of those who lost income, 6 percent cut their spending by at least 25 percent, while only 5 percent say they are still spending just as much as they did pre-pandemic.
- Almost 30 percent admit to finally sticking to a budget, even though they had made a budget in the past and did not stick with it
- Approximately 45 percent of respondents feel that President-Elect Biden will be good for their finances
For Dvorkin, the pandemic has made being a financial counselor both harder and easier. “It’s been tough hearing how hardworking Americans are struggling to make ends meet. These aren’t lazy people looking for a handout. These are Americans who want to work but can’t. Then again, I hear hope for the future in their voices – especially when they tell me, ‘Howard, now I get it. Never again will I forgo an emergency fund.’ If we can emerge from this pandemic with this profound psychological shift in our thinking about money, we might avoid a lot of pain in the future.”
About: HerMoney is a digital media company focused on improving the relationships women have with money. Started by personal finance expert Jean Chatzky, the mission of HerMoney is to level the playing field for financial security, confidence and power with content that is welcoming, thought-provoking, bold, unbiased and always smart.
About: Debt.com is the consumer website where people can find help with credit card debt, student loan debt, tax debt, credit repair, bankruptcy, and more. Debt.com works with vetted and certified providers that give the best advice and solutions for consumers ‘when life happens.’