COVID-19 & Personal Finance
What cost COVID? From families who lost loved ones, on people who are seriously ill, it is no secret that the pandemic has changed our way of life. From where we work to how we shop, COVID-19 has had a major impact on everything. It’s also hard to deny that the coronavirus has had an outsizes impact on employment. Our economic future is uncertain.
To understand how the pandemic is affecting the finances of U.S. workers, FlexJobs and Prudential partnered for a survey of 1,100 FlexJobs members in June 2020 to find out how their finances are faring during the pandemic. The information below was put together by Rachel Pelta and published August 7th. It is an interesting look at how the pandemic is affecting job security and peoples approach to living and earning a wage.
"The pandemic exposed the widening gap between the financially secure and insecure in this country, with people of colour, women, younger generations, gig workers, and the retail workforce disproportionately impacted," said Dawn Goldbacher, vice president of business development at Prudential, in a press release.
People who did not question their financial stability pre-pandemic are now experiencing a significant shift: 24% of respondents reported having financial struggles before the COVID-19 outbreak, and now, 44% of respondents acknowledge that they are currently struggling financially. According to the respondents, 21% considered themselves as financially secure pre-pandemic, but now that number has dropped to only 10%.
The importance of maintaining a financial safety net has increased, and 84% polled said they are taking specific steps in regard to their finances, but admit their savings took a hard hit and consider it a negative long-term impact on their financial health, notably on retirement plans.
Some respondents (20%) made changes to their retirement savings plans; this includes 12% who stopped or reduced their retirement contributions, and 8% who withdrew from all retirement savings.
Armed with the knowledge of how impactful the coronavirus crisis has been on their finances, very nearly half of the survey respondents (49%) are now actively looking for alternative sources of income. Respondents told FlexJobs/Prudential that, as a response to COVID-19's devastation, in the next three to six months they plan to do the following:
· Try to pick up extra work/hours, looking for sources of additional income (49%);
· Build emergency savings (28%);
· File for unemployment (28%);
· Delay a major purchase, such as a car (25%); and
· Use emergency savings (23%).
But respondents also acknowledged that because of their now exacerbated shaky finances, it's important to examine their situation pre-crisis. The analysis found:
Only 30% agreed that they had a good plan in place in case they got sick or needed care in the short-term, and even fewer strongly agreed (12%).
That although more than two-thirds say personal financial wellness is a key priority, only 50% agreed that they felt prepared to make informed decisions about their finances.
When asked what's keeping them back from feeling well-prepared to deal with their changing financial status, respondents cited the following obstacles:
· Don't know how to evaluate the different options (27%);
· Don't know what options are even available to them (23%);
· Didn't have strong role models when it comes to finances (23%);
· Don't understand the financial terms/jargon used (21%);
Not earning enough money (44%), high cost of living expenses (35%) and too much debt (26%) were the top reported reasons for not meeting financial goals before COVID-19; and
Other factors preventing people from reaching their financial goals included not being disciplined enough about finances (23%), not having enough time to focus on financial goals (16%), and not having access to workplace benefits (e.g., health/dental/vision insurance, paid time off, disability insurance) (15%).
The analysis recommends: "Consider gig work, freelancing, or part-time work as a way to help make ends meet. Many of these jobs can be done from the safety of your home. Almost one-quarter of survey respondents (24%) are using remote work to supplement their income. Some of these jobs also offer flexible hours, letting you combine one or more jobs to make up for an income loss."
"Access to protection, savings, education, and employment opportunities through the workplace and other channels are essential to recovery," Goldbacher said in the press releas
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