Reports of COVID-19 cases keep coming, and that's causing a world of anxiety for the public. And with reports emerging that the current situation could go on for months, many people are left wondering how on earth they're going to pay their bills.
Financial concerns are so pressing these days that they actually trump health concerns in one study. Finance Buzz reports that 63% of Americans are worried about getting infected with COVID-19. By contrast, 68% are worried about paying their bills while COVID-19 wreaks havoc on their finances.
When we look at what Americans have set aside for emergencies, it's easy to see why. Only 58% of those surveyed have money in the bank for unforeseen circumstances like the situation the entire country is in, reports Finance Buzz, and of those, just 25% have enough cash to cover more than two months of living expenses. Meanwhile, 10% only have enough money to pay for two weeks' worth of bills or less.
If you're worried about covering your expenses in the coming weeks, the good news is that there may be relief in sight. At the same time, let this situation serve as a wakeup call to build a solid emergency fund once all the madness dissipates.
Americans are unprepared for emergencies
A true emergency fund is one with enough money to cover three to six months of essential bills -- something most Americans clearly don't have. If you're without adequate emergency savings, for the love of financial security, pledge to change your ways once this health crisis wanes. Get into the habit of automating your savings so that money from each paycheck you collect goes right into a savings account -- an account you pledge not to spend from. At the same time, plan to budget more judiciously so you have wiggle room during periods when your income takes a hit. That could mean moving to a cheaper home to pay less rent, or giving up a car you can live without so you're not forced to keep making monthly payments on it.
As for the time being, if your income has been slashed by COVID-19 -- say, you work for a retailer that's closed for the foreseeable future, or you're employed by a small business that already had to lay you off -- don't hesitate to seek relief. Many utility companies are cutting customers slack in the coming weeks if they can't pay their bills, and credit card companies are letting consumers defer or lower monthly payments temporarily because of the current crisis. Reach out to the service providers you use and don't hesitate to ask for leeway as millions of people grapple with a reality we've never seen before.
There's already fear that the current economic conditions caused by COVID-19 will spur a full-blown recession -- and an emergency fund is the one thing that could get you through one. If you don't have a healthy level of cash reserves in the bank at present, pledge to do better in the future. Till then, keep your distance, hunker down at home, and do your best to stay safe.