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The coronavirus pandemic has thrown millions of Americans into chaos, negatively affecting financial well-being along with physical and mental health. As unemployment soars and monetary uncertainty emerges, a new NerdWallet study finds that nearly half of Americans (48%) actually feel less confident in their personal finances because of COVID-19.
In a survey of over 2,000 US. adults commissioned by NerdWallet and conducted online by The Harris Poll, we asked Americans how COVID-19 affects their finances – including spending and saving habits, feelings about buying homes and investments, and money plans for an end to the pandemic.
The main conclusions
Impact on profits: Close to 7 out of 10 Americans (69%) say COVID-19 has negatively affected their household income, including 80% each of the millennia (24-39 years) and Gen Zers (ages 18-23) .
Saving incentives: More than a third of Americans (36%) plan to use / have used an incentive check for savings and / or investment; as many (36%) say they use it to pay for essentials.
Housekeeping: About three-quarters of Americans (73%) say they are concerned about buying a home in 2020 because of the COVID-19 pandemic; of greatest concern is the possibility of securing potential tourist homes (34%) and then the possibility of selling their current housing (27%).
Travel insurance: Only one in five Americans (20%) acquires vacation travel insurance before the start of COVID-19, but 45% say they can purchase travel insurance for future vacation travel after the COVID-19 pandemic.
Postpandemic plans: Three-quarters of Americans (75%) plan to take financial action after a pandemic, such as saving more in emergency funds (38%) and spending less on ignorance (37%).
A pandemic affects how we save and spend
COVID-19 has changed more than social behavior; converts also changed financial behavior. In general, Americans say it saves more and costs less.
Approximately 2 out of 5 Americans (41%) said they are now saving more money than they were before the COVID-19 pandemic, with younger Americans talking about it more than their older counterparts. About half of Gen Zers (50%) and millennials (52%) save more than before, compared to 39% of Gen Xers (ages 40-55) and 29% of baby boomers (ages 56-74).
More than half of Americans (48%) report spending less now than they did 36 years ago. 36% changed how much they invest.
Probably due to a combination of financial instability and lack of access to spending on things we spent on earlier, almost all Americans (94%) report spending less during a COVID-19 pandemic. More than 3 out of 5 note that they spend less on shopping (63%), restaurant food (62%) and transportation (62%). More than half (56%) spend less on entertainment, and 45% cut personal hygiene costs. About 3 out of 10 Americans who have children under the age of 18 (28%) say they spend less on childcare.
While many Americans spend less, many also spend money differently in circumstances. About 2 out of 5 Americans (37%) say they put more effort into supporting local businesses, and 35% reported breaking more for the export and delivery of restaurant food and groceries. About 1 in 6 Americans (16%) donated to COVID-19 relief efforts, such as a contribution to GoFundMe for affected people and businesses.
In times of financial trouble, this is a smart move, especially if you like the amount you have just saved or are worried about job security. If you are in a good position, it is a good idea to spend money without spending unnecessary purchases to replenish your savings. Consider this a temporary measure to increase your peace of mind in the event that in the future you face losses or unexpected costs.
Of course, if you have the means, you can also help others who are classified as happy. “If you’ve set up a convenient emergency fund and you’re still making money, you may want to think about supporting a small business by purchasing gift cards that can be used in the future, or by donating food to your catering bank,” he says. Kimberly Palmer, NerdWallet’s personal finance expert.
Many are trying to combat the loss of income
Millions of Americans are feeling the impact of the COVID-19 pandemic on their incoming money – more than two-thirds of the US. adults (69%) report that their home income has been negatively affected. Of these, 70% either took steps to fill the monthly income gap or at least considered it.
A quarter of Americans whose income at home was negatively affected by COVID-19 (25%) said they were considering taking or withdrawing money from their emergency savings to help fill the income gap. A quarter sought / accepted additional work (25%), and a quarter abolished ignorance (25%) or at least considered it.
Job loss can be a traumatic experience, especially if it is caused by circumstances beyond control, such as a pandemic. “Losing profits, even temporarily, is one of the most stressful financial things that can happen to a person. Application of unemployment benefitsLooking for a new job and hoping for savings can help overcome the crisis, ”Palmer said.
Auxiliary checks go to needs, saving savings
Many of U.S. precautionary laws receive or will receive assistance irritation check from the federal government. When asked how they plan to use them or use them, more than a third of Americans (36%) said they plan to use / used it to pay for basic necessities, and the same proportion (36%) said they plan to save. either invest or already have.
The best way to spend this money is highly dependent on your personal circumstances, but if you have yet received or used an incentive payment, check out NerdWallet’s guide on how to prepare and provide assistance. It can help you think about how to use that money to improve your financial situation, and potentially help others.
Think differently about home shopping, travel insurance and investment
Aside from the impact on daily financial life, the COVID-19 pandemic is also changing the way Americans think about buying a home by insuring themselves on travel and vacation.
Home shopping: More than 1 in 5 Americans (22%) plan to buy a home in 2020, but some have since changed their plans. Of these potential home buyers, 35% still plan to buy this year, 30% no longer plan to buy in 2020, and another 35% are confident they will.
Not surprisingly, this year there are some concerns about buying a home. About three-quarters of Americans (73%) say they are concerned about buying a home in 2020 because of the COVID-19 pandemic. Some concerns are related to security, but there are also financial issues such as the ability to make mortgage payments (25%) or no longer have cash (25%).
Travel insurance: Due to the abolition of the coronavirus pandemic with so many travel plans, many Americans are rethinking their position on travel insurance, which can help cover your costs in case you have to ruin future trips.
One in five Americans (20%) claimed to have purchased travel insurance for a vacation before COVID-19 and 15% considered it, but eventually decided not to buy. However, nearly half of Americans (45%) say they are likely to purchase travel insurance for future travel trips after a pandemic.
While travel insurance can be a great way to mitigate the risk of illness, it’s important to understand the limitations. For example, the “fear of travel” does not usually spread. In other words, while actually getting sick is a reason to cancel an insurance trip, the fear of getting sick has probably disappeared.
Investments: Stock market volatility is common in times of uncertainty, and the COVID-19 pandemic is no exception. More than a quarter of U.S. investors (26%) say they invested in a company or industry that fell in value during a pandemic, and 1 in 5 investors (20%) balanced their portfolio to adapt to current events. In each of these cases, about 1 in 8 sold off investments: because they were concerned about market instability (13%) or basic payment (12%).
“Since no one can take the market, it’s usually a good idea investment strategy and does not make much change, even if the market experiences a lot of fluctuations. If you’re happy with your investment and they make sense based on your risk tolerance and age, then it might be a good idea to get rid of those daily fluctuations rather than respond to them, ”Palmer says.
Save more, less costs after graduating from COVID-19
Not everyone has the ability to make financial changes during this difficult period, but many are making plans to end the pandemic. Three-quarters of Americans (75%) plan to take financial action after COVID-19, with the most popular funds saving more in the emergency fund (38%) and spending less on ignorance (37%).
“The American pandemic has taken control of their lives. One way to regain a sense of normalcy is to control what we can by increasing savings, repaying high interest debt and cutting unnecessary spending. A soft emergency fund can provide the balm we need to survive a difficult times and rebuild their lives, ”Palmer says.
This survey was conducted online in the United States by a Harris poll on behalf of NerdWallet on May 5-7, 2020 among 2,051 US. adults 18 years and older. This online survey is not based on probability selection, and therefore no estimate of theoretical selection error can be calculated. For a complete survey methodology, including weighted variable sizes and subgroup samples, please contact Chloe Wallach at [email protected].