The COVID-19 outbreak has spurred not just a health crisis, but also an economic one. With millions of Americans now out of work and countless small businesses shut down, a large number of U.S. adults are already scrambling to pay their bills.
While emergency savings can be a lifeline in situations like the one we’re facing, 50% of Americans expect that their savings will run out by the end of April, according to a new survey by real estate service Clever. And given that the crisis is showing no signs of letting up in the near future, that’s extremely troubling.
Unemployment claims have been reaching record highs as Americans scramble to put money in their pockets in the absence of a paycheck. But those benefits, even with the newly approved $600-a-week boost that came about in late March, may not suffice in helping those who are out of work pay their bills.
That’s where emergency savings come in. Ideally, we’re all supposed to have three to six months’ worth of living expenses in the bank to prepare for situations like these. Yet 27% of those surveyed by Clever said they never had emergency savings to begin with, while 11% said they’ve already spent theirs. In fact, only 23% of respondents have enough money in the bank to cover six months of living expenses or more.
If you’re out of work and don’t have emergency savings, it’s obviously too late to go back in time and build some. But what you should do is make establishing an emergency fund your first priority once things get back to normal. That way, if another crisis arises and you’re unable to work for a period of time, you’ll have a way to pay your bills without taking on debt. And to be clear, 25% of Americans have already added to their debt load because of COVID-19, with 28% of folks in that category borrowing over $2,000.