COVID-19 has turned our lives upside down. Along with affecting our health and wellbeing, the pandemic has also caused one of the largest economic downturns since the Great Depression. From furloughs to layoffs, Americans have felt the impact of the current economic uncertainty firsthand.
As a digital product and innovation consultancy, Highland regularly partners with companies and entrepreneurs that are seeking to improve financial stability, from Fortune 500 companies to digital-first startups.
In order to get a better understanding of how the pandemic has affected the pocketbooks of Americans, we took a closer look at how personal finances and spending habits have changed since COVID-19 by surveying Americans across the country.
COVID-19 Spending Habits
According to respondents, 63% have cut back on spending during COVID-19 due to a number of reasons, including feeling the need to be more cautious with their finances (60%), experiencing a reduced salary or income (49%), and staying home more often (40%).
In terms of where respondents have cut back on spending, 64% say they are spending less on dining out or takeout, 61% have reduced spending on entertainment such as concerts or movies, 55% are buying less apparel and 52% are spending less on travel.
It is interesting to note that 21% of respondents say they have been spending more since the pandemic. Of those respondents, 51% say they are buying more food or groceries and 50% are buying more household supplies.
Living Paycheck to Paycheck
After the unemployment rate spiked to more than 14% in April, Americans continue to be wary about their job security and income. According to respondents, more than a quarter feel they do not currently have a stable income, and 63% say they have been living paycheck to paycheck since the pandemic. Millennials appear to be the hardest hit demographic as 64% say they are living paycheck to paycheck.
Respondents are not leaving out any options when it comes to the methods they use to spend and purchase. According to respondents, one-third have opened up a new credit card since the pandemic.
Debt and COVID-19
As Americans look to cover their basic needs during COVID-19, many have taken on new debt in the process. According to respondents, more than a quarter say they’ve accumulated $10,000 or more in debt, and 42% say they have taken on more debt than they normally would apart from buying a home.
Respondent’s emergency savings have also taken a hit since the pandemic. Overall, 47% say they have run out of their emergency savings funds and 67% regret not having enough emergency savings before the pandemic hit. And if they were faced with a surprise $500 expense, 82% say they would not be able to afford it.
As pocketbooks tighten, many Americans are taking a closer look at how much income they’re taking in compared to how much of it they’re spending. Even before the pandemic, 44% say they were living beyond their means. Gen-Xers were most likely to say they had been living beyond their means followed by millennials.
But when do Americans expect a return to a pre-pandemic economy? According to respondents, a majority don’t expect their household finances to recover anytime soon. Overall, 22% don’t expect their households to recover until six months to one year from now. And as far as the country’s economy, only 4% expect it to recover within the next three months.
A majority (74%) agree that the only way to rebuild the economy is to control the pandemic.
In March, a $2.2 trillion relief package, known as the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was passed, which provided a much-needed financial safety net. However, those funds have been spent, which has left many Americans hoping for a second economic stimulus check.
According to respondents, only 43% are confident that a second stimulus relief bill will be passed. Of those respondents, 36% believe one will be passed in November and 31% don’t feel it will happen until sometime in 2021.
From Oct. 26 to Oct. 30, 2020, we surveyed 2,002 Americans on the topic of personal finances and spending habits since the pandemic. 48% were male and 52% were female with a median age of 38. Income: Under $20K: 15%; $20–40K: 24%; $40–60K: 27%; $60–80K: 17%; $80–100K: 8%; Over $100K: 9%.
Employment status: Full-time: 67%; part-time: 14%; seeking opportunities: 4%; unemployed due to COVID-19: 4%; unemployed not due to COVID-19: 5%; furloughed: 1%; retired: 3%; prefer not to say: 2%.
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