With COVID-19 shuttering businesses and driving millions to file for unemployment, finances are being hit harder than many Americans have seen in their lives.
According to a survey by Country Financial, 49% of Americans say their level of financial security is worse since the pandemic began, and 33% say they were not financially prepared for a pandemic, says a news release.
While the pandemic has set many Americans back, it also presents an opportunity to regroup and get on the right financial track, the news release says.
“If you haven’t developed a financial plan, now is the time to kick planning into high gear and assess what your short-term and long-term goals are,” Troy Frerichs, vice president of investment services at Country Financial, said in the release. “If you have developed a plan but haven’t been good about keeping to your goals, now is the time to re-commit and work on developing better personal financial habits.”
Many Americans are prioritizing day-to-day survival over long-term financial goals, the release said. The survey found that 45% of Americans say their top financial goal since the pandemic hit is to pay day-to-day expenses, followed by saving for an emergency fund 27%, saving for retirement 16% and investing in the stock market 5%, the release said.
Americans’ plans for their stimulus checks also reflect these changing priorities, with 38% of those who were expecting a check saying they would spend it on everyday expenses, while 15% planned to put the funds toward a mortgage or rent payment, the release said. Only 22% planned to save or invest their stimulus check, the release said.
“This is an incredibly difficult time for so many Americans because we have never experienced a pandemic like this before,” Frerichs said in the release. “At a time when we feel like so much is out of our control, we have to focus on what is in our power, which is how much we spend and what we save. Cut spending where you can and concentrate on paying bills on time to avoid a buildup of debt and fees that will have to be paid later.”
While so much remains uncertain, Americans still have the power to take the following steps to improve their finances during this time:
• Develop a budget: The pandemic is forcing many Americans to make hard choices — particularly cutting expenses — so it’s more important than ever to use this time of uncertainty to establish a budget and commit to living within your means.
• Create an emergency fund: Many Americans struggled to build an emergency fund even before the pandemic, but an emergency fund is now more important than ever. If this financial situation gets worse before it gets better, Americans need to have money set aside that they can lean back on in a last resort. If you don’t have an emergency fund, try to set aside as much as you can every month and aim to build enough to cover between three to six months of living expenses.
• Explore opportunities to lower interest rates: The pandemic has led to lower interest rates, which may provide a great opportunity for some to get closer to their financial goals, such as paying off debt or lowering a mortgage payment. Connect with a financial representative and lenders to explore options; just be sure to read the fine print and take any associated costs into consideration before making any decisions.
• Evaluate your long-term goals: While many are thinking about how to get by right now, it’s important to look beyond the pandemic as well. Look at where you stand with your long-term goals and review your strategy for achieving them.
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