Have you seen the hundreds of t-shirts, memes, tweets, even coffee mugs all giving 2020 a one-star, very bad year, rating? Clearly, there has been little to recommend this year to those of us who have lived through it. With a pandemic, a recession, and a difficult election, how are we keeping our heads above water physically, mentally and financially? It turns out, many Americans are struggling to do just that.
In a survey of more than 2,000 Americans, Freedom Financial Network found that 73% of respondents are struggling with the impact of COVID-19 on their financial health, which in turn, is causing a strain on their mental health. But despite the stress, there are some bright spots for working Americans, such as an overall drop in credit card debt and an increase in savings rates. Below, we break down what the statistics might mean, and what you can do to strive for a brighter, healthier 2021.
COVID-19 had emotional and mental impacts, as well as financial
The impact of the COVID-19 pandemic and the resulting recession affected not only our employment, debt, and household budgets, but how we felt about our financial health and security. Forty-six percent of respondents to our survey said that the current situation has caused them to consider seeking help for feelings of anxiety or depression.
Mental health challenges can have an effect on your finances, sometimes compounding problems. Depression and stress can affect spending and the ability to budget or plan for expenses. The link between your mental and physical health and your financial health is one you shouldn’t ignore.
Some respondents though, sounded a more positive note. The younger generations, Gen Z and millennials, for instance, were more likely to be optimistic about the current economic situation in the U.S., with 51% of Gen Z and 50% of millennials saying they feel good or very good about current economic conditions. However, despite the more upbeat attitude, these generations still faced challenges, with 20% of millennials saying they experienced job loss and 33% revealing a loss in income of 50% or more.
Savings rates are up, debt is down, but we are still struggling
The responses on debt and savings seem to be a good news, bad news situation. For wealthier Americans, savings rates are up, hitting 32.2% in April of this year. However, in response to our survey, we found many Americans are still carrying a high debt burden, with 32% reporting credit card debt over $10,000. Combine that with job loss, and their ability to both save and to pay for household expenses is limited. Here is a snapshot of credit card debt load, as described by respondents to the survey:
And although savings rates nationally are at historic levels, the highest number of respondents to our (39%) still said they had less than $500 in savings.
How can you improve your physical, mental and financial health in 2021?
It’s hard to tell from the survey if the financial outlook for most Americans is a glass half full or half empty. We likely won’t see an improvement in the job market or the economy overall for months, and a full recovery is probably a multi-year process. But there are things we can do as individuals and families to put ourselves on the road to better physical, mental and financial health. Here are some simple steps you can take:
- Keep, or start, saving: Now that we have learned the hard way how important an emergency fund is when disaster strikes, keep saving. Using rounding apps like Acorn, Chime, or Qapital is a good way to make saving part of your daily routine.
- Keep expenses down during the holidays: This probably isn’t the year to go crazy on the gifts. Get creative with your gift giving and focus on the handmade, the personal, and the thoughtful, instead of the expensive. This will help contain holiday debt and get you off to a better start in the New Year.
- Use the financial support available: Even if you don’t get another stimulus check, make sure you are using the support still available. If you need forbearance on a mortgage, car, or personal loan, contact your lender. It’s not too late.
- Use the health support available: If you need mental or physical health support to get through the pandemic, it is available. If you lost your health insurance from your employer, you may be able to use the ACA Marketplace or expanded Medicare to get insurance. And if you need someone to talk to, help is available there as well. There are low cost options and many new online platforms that use personal technology to provide access to mental health care.
Freedom Debt Relief is just one more resource for you
As a consumer-centric company, Freedom Debt Relief strives to be one more resource you can use to improve your financial health, learn how to manage your debt, and to move your family toward a better financial future. You can visit our blogs for the latest news and information on personal finances, and use our free debt guide to learn about options to manage debt. If you are overwhelmed by debt and need more serious alternatives, you can talk to our Certified Debt Consultants to learn more about your options for debt relief.