The coronavirus pandemic and subsequent lockdowns and restrictions have been devastating for many Americans’ finances, from those who lost their jobs to small business owners who struggled to make ends meet — or closed their doors for good.
As we hit the one-year anniversary of the coronavirus pandemic in the U.S., I’ve asked financial experts, business owners and everyday people to reflect on the financial struggles many have dealt with over the past 12 months. Here are some of the most common financial pressures Americans have been facing.
Losing a Job or Household Income
According to Fidelity Investments’ 2021 Financial Resolutions Study, 23% of Americans lost a job or household income in 2020. How Americans have dealt with this loss varies from case to case, but Roberta King, VP and branch leader at Fidelity Investments Investor Center in Columbia, Maryland offers the following insight: “If they lost a job, then we discuss how they can get creative to find their footing back in the workforce, or in some cases, start retirement early.”
Sacrificing Careers for Childcare
“A majority of those who left the workforce in 2020 were women,” said Stephen Dalby, founder of Gabb Wireless. “Many left to take care of their children because childcare and educational facilities were closed. Those facilities are slowly reopening, but that doesn’t necessarily mean that those women will be coming back into the workforce.”
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As of February, nearly 3 million American women had left the labor force over the past year, many of whom are mothers of young children, CBS News reported. This could lead to extra financial pressures for families who relied on that second income to get by.
Paying for Unexpected Emergencies
The Fidelity survey found that 20% of Americans experienced a financial setback in 2020 caused by an unexpected non-health emergency. Without an emergency fund in place and many Americans out of work, an unexpected expense could cause major damage to a financial situation and cause people to take on extra debt.
Providing Financial Assistance to Family or Friends
Even Americans who did not lose their own jobs may have had their finances impacted by friends or family members who became unemployed and reliant on them for financial assistance. According to the Fidelity survey, 18% of Americans experienced a financial setback due to needing to unexpectedly provide financial assistance to family or friends. And a separate survey conducted by Ariel Investments and Charles Schwab found that this was more likely to be the case for certain sectors of the population.
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“From our survey, we see a greater likelihood among Black families that they have provided support to other family members and friends during this crisis,” said Carrie Schwab-Pomerantz, board chair and president of the Charles Schwab Foundation.
Covering Health Expenses
Sixteen percent of those surveyed by Fidelity said that they experienced a financial setback caused by a health emergency in their family. This is unsurprising given the widespread toll the pandemic has taken on families across America.
“Because of the sheer number of people hospitalized due to COVID-19 (which is nearly 150,000 people according to the CDC), hospital bills are racking up for families,” said Bethany Bayless, host and producer of “The Motherhood and Money Show” podcast. “And with the pandemic leading to the loss of so many jobs, people are losing their way to pay for those hospital bills, causing them to plunge deeper into debt. Some are even needing to sell their house to cover medical expenses from COVID-19-related medical bills.”
According to data from FAIR Health, the average cost of hospital care for COVID-19 patients without insurance or who receive out-of-network care ranges from $51,389 to $78,569, depending on age.
Dealing With the Extra Costs of Working and Educating From Home
“Many are suffering the dual impact of sudden income shocks from losing work, having wages cut or being unemployed for an extended period of time, on top of expense shocks from additional costs like upgrading internet for homeschooling, hiring a tutor, increased utility costs from being home all day, and increased food costs from kids not getting free/discounted lunches in school,” Schwab-Pomerantz said.
Pivoting Business To Stay Afloat
Some small business owners had to get creative to stay open, with some launching entirely new businesses amid the pandemic.
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“When COVID hit, we saw company marketing budgets contract or even evaporate overnight with all the uncertainty,” said Andrew Pincock, co-founder of Ampry. “My company instantly lost a lot of revenue and it put a big strain on cash flow. Fortunately, we committed our cash reserves to keeping the team and refocusing on a conversion software, Ampry, which helped us pivot to a new model as we slowly emerge from the pandemic.”
Gabrielle Olya contributed to the reporting for this article.
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