COVID-19 is infamous for its host of drastic changes, ranging from the postponement of major life events to businesses shifting to remote work or shutting down. It has also changed the way people think about their priorities. DepositAccounts surveyed 1000 respondents and reveals that eight in 10 Americans (82 percent) shifted their financial priorities in some way.
Thirty-six percent are more focused on paying off their debts while 33 percent prioritize building an emergency fund. Paying monthly bills comes in third with 19 percent. Other priorities, like getting married, buying silicone rings for engagement or creating a house hunting checklist fall behind since these necessities do not outweigh the cost of debts and building funds.
Other Key Findings
Apart from revealing the shift in priorities, the survey revealed that financial priorities vary by age group. For instance, Gen X and millennials are more focused on paying off their debts (25 percent and 28 percent, respectively) while Gen Z individuals put their energy towards finding a better job.
There is also a difference in priorities between men and women. Paying debt tops off the financial priorities of men (29 percent over 22 percent of women) while women would rather pay off their monthly bills (30 percent over 8 percent of men).
About 45 percent of the respondents say they are checking their bank accounts more often prior to COVID-19. Thirty-two percent of the respondents also admit to tracking their spending more often to ensure they are still secured financially.
Americans have learned many money lessons from this global crisis, too. The top three most important lessons they’ve learned are:
- No role or industry is immune to layoffs or shutdowns (19 percent)
- Emergency funds are vital (33 percent)
- Paying off debts (36 percent)
While the pandemic has put financial strains on many individuals and families, a “pro” is that it forced many Americans to practice healthier financial habits.
Planning and Managing Your Finances During COVID-19
COVID-19 is likely going to continue to affect your financial plans. As emphasized by the study above, no matter what your income level is, it’s never too late to take steps to secure your financial future. The first thing to remember is to not panic. Instead, take a deep breath and consider applying the following strategies as you navigate COVID-19’s financial impact.
- Add to your emergency savings. Take a page out of America’s book; focus on having sufficient emergency funds. Due to the uncertainty caused by the pandemic, keeping a year’s worth of expenses saved in your bank account is advisable. To achieve this number, you need to be stricter with your budget allocations, prioritizing essential needs such as food, hospitalization and rent. Consider this saving tactic: set aside 50 percent of your income for your necessities, 30 percent for wants and 20 percent for your financial goals. If you want to build a bigger emergency fund, increase the percentage for your financial goals.
- Reconsider your debt strategy. It’s never advisable to carry debt, especially high-interest credit card debts. Due to the stock market’s volatile nature, interest rates are bound to fall (in fact, they have fallen already). If you have loans, refinance them at lower rates. Also, look for a balance transfer credit card to secure lower interest rates on your credit card debt.
- If possible, invest more. Selling investments is inadvisable right now since many people experienced a decrease in their portfolio’s value. Plus, the stock market will most likely continue to volatile. However, if you can afford to, contribute more to your investment accounts and retirement savings.
- Identify other revenue sources. Apart from cost savings, there are many ways to generate more income, even if you’re working from home. Since almost everything is done online, search for online job opportunities. Apply for jobs you can do in the weekends or evenings so you can fit it with your current 9 to 5 job. Whether it’s writing for blogs or online tutoring, you’ll find an online job that suits your skill set.
- Stop hoarding. Since the start of COVID-19, empty grocery shelves have become the new norm due to panic buying. Before you buy, assess your current supplies. Consider the size of your household and buy only what you need. If you are living with an elderly, an infant or a person with a disability, prioritize dietary and medical needs first.
As the country continues to navigate through the effects of COVID-19, many Americans will continue to tighten their belts and establish financial security for themselves and their families. This financial trend is bound to continue even after the pandemic.