- Millennials, Gen Zers say pandemic has derailed their financial independence
- Some are worried about future stimulus
- Young Americans still prioritize retirement
- Survey: Most Americans Are Feeling Anxious About Their Money
- COVID-19’s Impact
- Debt, Savings Anxieties Grow
- Which of the following aspects of your personal finances are among your top three biggest causes for anxiety following the coronavirus outbreak?
- The Most Vulnerable Are the Most Affected
- Money Anxieties Affect Mental Health
- Beginning the Recovery Process
- How soon do you expect the economy to return to normal (i.e. similar to before the pandemic)?
- Long-Term Impact
Millennials, Gen Zers say pandemic has derailed their financial independence
The U.S. economy just had its worse performance ever as businesses shut down across the country as well as much travel decline. USA TODAY
The coronavirus pandemic has abruptly upended Aidan Curran’s life this summer.
In early July, the 24-year-old got laid off from his job as an associate at a public relations firm in Washington, D.C.
Before he lost his position, he was temporarily staying with his parents in Cape Cod because his office wasn’t going to reopen until Labor Day.
But now he’s stuck paying nearly $1,400 in rent each month for an apartment he’s not living in. And his lease isn’t up until January.
He hasn’t received any money from unemployment over the past month, and still hasn’t gotten a stimulus check from the spring.
“It’s been an absolute nightmare,” says Curran, who had plans to attend law school but put those dreams on hold. “I keep applying for jobs, but have yet to get an interview. It’s tough to find a job that doesn’t already have a ton of applicants.”
Curran, millions of other Americans, is facing an uncertain future as policymakers in Washington remain at odds over another stimulus package after the additional $600 in weekly unemployment benefits expired in July.
“It’s unfortunate that both Republicans and Democrats can’t come to a solution to help people me,” says Curran, who is paying off student debt from his undergraduate degree. “The failure to get any unemployment because of the dilapidated and antiquated unemployment system has been a mess. I could really use that extra $600 right now.”
The coronavirus (COVID-19) is impacting the global economy and raising fears of a recession. What causes a recession and what are the signs? USA TODAY
'Insulin or groceries': How reduced unemployment affects struggling Americans from California to Mississippi
There are two COVID Americas: One hopes for an extension of federal unemployment and stimulus. The other is saving and spending.
The coronavirus pandemic has created a new set of financial obstacles for young millennials and Gen Zers. Most are unsure how their generations can navigate through the worst global economic crisis since the 1930s.
About 59% of young Americans say the pandemic has derailed their goal of becoming financially independent from family or other support, according to a new report by The Harris Poll on behalf of TD Ameritrade.
“Even before the economic downturn, young Americans generally had anxiety about their finances due to stagnant wages, the rising cost of living and debt burdens. Now that’s been exacerbated by the pandemic,” says Keith Denerstein, director of investment products and guidance at TD Ameritrade. “But there’s no shame in turning to your parents or family for additional support.”
Even though nine in 10 Americans say that they and their parents want them to be financially independent, more than two thirds expressed anxiety about the pandemic’s effect on their finances. And 63% were concerned they may lose their job.
The study, which was given exclusively to USA TODAY, surveyed 2,002 Americans ages 15 to 29. They were polled on Feb. 20 to March 4, before the World Health Organization declared a pandemic, and then again in April once the shutdown was underway.
The coronavirus pandemic has created a new set of financial obstacles for young Americans. (Photo: designer491, designer491, designer491, Getty)
Some are worried about future stimulus
Lawmakers in Washington are working on a fifth round of stimulus relief, with Democrats and Republicans struggling to come to an agreement as vital lifelines enhanced unemployment benefits and rent moratoriums come to a halt, leaving out-of-work Americans in limbo. Both parties included another round of $1,200 stimulus checks in their proposals.
About 71% of young Americans are worried about their generations’ ability to survive the financial downturn without government support, the data showed.
“For those who have had their income disputed through the termination of their employment, they have leaned on government stimulus to insure that their finances are close to where they were prior to the pandemic,” says Denerstein. “And they are using the stimulus money in the way we’d hope them to, whether that’s contributing to their savings, paying down debt or using it to cover their living expenses.”
To be sure, many young Americans were dependent on their family before the recession, the TD Ameritrade data shows. Just before the pandemic began, the first survey found half of young Americans still received financial assistance from their parents, grandparents or others by the time they turned 30, while the other half were already self-sufficient at that age.
About 1 in 4 still rely on their parents to cover their entire rent check. About 58% say their parents pay for all or a portion of their cell phones, and more than half pay for their insurance.
Young millennials in particular feel that the odds are against them, crippled by rising living costs and student loan debt. About 82% said their salary levels have remained the same while the cost of living rises, making it difficult to achieve financial independence. And about 42% say their student debt alone makes them think they’ll never be independent.
Young Americans still prioritize retirement
While some have shifted their investment strategies, the majority remain committed to retirement plans. And many have turned to investing to increase their net worth at an early age.
Following the economic downturn, about 40% have already put more money into savings and 35% started a side hustle for more income. Nearly a quarter bought investments, while 18% stopped investing in the stock market. About 31% moved back in with their parents.
Emily Parlapiano, 30, is one of those young Americans who used her stimulus check to get ahead on her retirement goals.
During her early 20s, she wasn’t maxing out her 401(k) account because of her student debt. To get her finances on track, she used the “avalanche method” to pay off her student loans, tackling the ones with the highest interest rates first. After she paid off her loans within four years, she upped her retirement contributions.
When the pandemic hit, Parlapiano was fortunate to have job security and put her $1,200 stimulus money toward maxing out her Roth IRA. She also recently moved in with her significant other, saving her $200 a month. Now she’s padding her emergency fund and stashing money away for a down payment on a future home.
“You have to stay steady, hopeful and positive.
If you go into the doom and gloom phase, it’s hard to get that mindset,” says Parlapiano, who’s employed at a small, nonprofit advisory firm that works with fortune 500 companies on their social impact strategies. “Now I want to throw as much money as I can in my retirement accounts. This isn’t about the next three to five years. This is long-term investing.”
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Survey: Most Americans Are Feeling Anxious About Their Money
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Gabriella Braddock and her husband Tyler are young entrepreneurs who spent the past three years building a music studio and recording business in their New Jersey hometown.
Then the COVID-19 pandemic derailed every financial plan they had in place for 2020.
“We have dealt with loss of income, taken on more debt, and used our savings to make our usual payments,” Gabriella, 25, says. “The economic effects have completely wiped out our financial goals and our priority is to essentially survive without going under.”
The Braddocks are among the more than half of all Americans feeling increased levels of anxiety regarding their personal financial situations in the months since the first confirmed cases of COVID-19 appeared in the U.S.
According to a recent survey from NextAdvisor, 51% of Americans feel at least somewhat anxious about their financial situation following the coronavirus outbreak. Nearly three in 10 Americans’ financial situation (29%) has been negatively impacted since the pandemic began.
While some face new challenges resulting from loss of income or uncertainty for the future, for many the current economic crisis only exacerbates already present stressors related to monthly bill payments, consumer debt balances, lack of emergency savings, or even just putting food on the table. The survey data shows that the number of Americans whose primary financial goal is continuing to pay for housing and basic necessities has jumped 11 percentage points, from 21% when reflecting on their priorities as of January 2020 to 32% in June.
“Anxiety can really become a snowball,” says Jennifer Dunkle, LPC, a financial therapist and founder of New Awareness Therapy Services based in Colorado. “It can build and build and build unless we take steps to try and take care of ourselves so that we can better handle the uncertainties and fears.”
For weeks, the spread of this novel coronavirus forced the country, and the globe, to grind to a halt as stay-at-home orders and state of emergency declarations left millions of workers jobs and without the ability to make regular payments or achieve financial goals.
“We’ve been growing the business very rapidly,” Gabriella says. “This year was going to be our six-figure year. Our numbers predicted it; we were consistently hitting our goals.”
But New Jersey’s stay-at-home order forced the Braddocks to close their studio’s doors and move business to limited services they could offer virtually. Through March and April, Gabriella says their income dropped to 20% its usual rate, and May’s totals are expected to fall even lower.
“Now, we’re going to be lucky to make the same amount that we did last year,” she says. “Any financial goals that we had are out the door. We’re simply trying to survive from month to month without accruing any more debt than we already have.”
Braddock and her husband aren’t alone.
Among those whose financial situations have been negatively impacted since the outbreak began, over one in three say they or someone in their household experienced layoffs or furlough (36%). Many have also experienced reduced pay (21%), fewer hours (33%); or otherwise had their financial situation negatively affected (13%).
“These people are stuck between a rock and a hard place,” says Danetha Doe, personal finance expert and creator of Money & Mimosas, a personal finance blog focused on financial well-being and equity. “They’re stressed about their current situation, but then there’s no clear path as to how to get it, because we don’t know where the economy’s going to go or when jobs will return.”
Young baby boomers approaching retirement (ages 56–65) as well as members of Generation Z (the youngest adults, ranging from ages 18–23) are the age groups most ly to report their personal financial situation as negatively impacted (36% and 33%, respectively).
But millennials are most ly to feel anxiety about their financial situation, particularly younger members of the cohort. Sixty-one percent of younger millennials (ages 24–30) report feeling somewhat or very anxious about their finances, compared to 51% of respondents overall.
Even for those people whose wallets have not been directly impacted, who are able to work from home and retain their same income, the anxiety can be just as present. “There’s a level of uncertainty now, because we don’t know where the economy is headed,” Doe says. “Even though they’re in a position where everything is OK on paper, they don’t feel financially secure.”
Debt, Savings Anxieties Grow
While many Americans are feeling more anxious regarding the overall state of their finances, specific worries don’t just involve employment loss, but also lack of savings and mounting debts as well.
According to survey respondents, the top three causes for anxiety since the outbreak began include:
- Debt: 37% overall; 21% say credit card debt while 24% report other debts such as mortgage, student loans, or personal loans
- Lack of savings: 35%
- Loss of employment or income: 31%
Gen Z and millennials are most ly to face anxiety caused by job or income loss (40%), while Gen X are worried by their lack of savings (42%). Baby boomers are the cohort most ly to face anxiety involving planning for retirement (27%).
Which of the following aspects of your personal finances are among your top three biggest causes for anxiety following the coronavirus outbreak?
Among Americans who say debt, lack of savings, loss of employment or income, saving for retirement, and additional childcare costs have caused anxiety following the pandemic, here’s how responses break down by generation:
Note: Respondents could select up to three options. In addition to these options, 14% of total respondents chose “Other” and 30% chose “None of these.”
The Most Vulnerable Are the Most Affected
For a population already under-saved and holding record amounts of debt, the difficulties of the pandemic have only magnified an existing problem, especially for the most vulnerable communities.
According to the survey, 21% of those who report an annual income of $30,000 or less are “very anxious” about their current financial situation, compared to an average 14% of those reporting higher income levels.
Lower-income respondents are also less ly than respondents in other income brackets to know where to turn for financial assistance or counseling (21% say “not confident at all” about where to get help, compared to a 12% average of other respondents).
“There is a great question of equity and value that’s coming up right now,” says Amanda Clayman, financial therapist and financial wellness advocate for Prudential.
“I think what we’re seeing with both the health and economic effects of the pandemic is that the consequences are not evenly distributed.
We’re also seeing the strengths and limitations in our system in being able to respond to collective problems.”
Money Anxieties Affect Mental Health
Financial anxiety isn’t an isolated condition; increased feelings of stress and anxiety can impact your overall physical and mental health and well-being.
“Stress and anxiety in our financial lives has a direct impact on our physical and mental health,” Doe says. “When we look at how any kind of anxiety and stress impacts the body, it can lead to things heart disease, inability to sleep, and lowered immunity, which during a pandemic is incredibly harmful.”
The effects can be just as dangerous, but anxiety stemming from financial issues directly can also present a more tangible path to resolution in some cases, because money has such a visible impact on our decisions and goals.
“There’s nothing unique about the anxiety we feel around money that’s different from anxiety in other parts of our lives,” Clayman says. “But we have a different opportunity because money is this concrete thing that we can work on; we can access both pieces, that concrete part and the psychological part with more facility when it comes to money.”
And while lender assistance and relief programs have provided help in the short term, questions about long-term, sustainable solutions remain.
“There are measures which are enabling people to hold it together now, but people in those situations are desperately worried about what’s going to happen in the future: when unemployment runs out, when evictions start again, when the lights are going to get shut off,” says Annie Harper, an instructor at the Yale School of Medicine who researches the relationship between financial health and mental health.
“Even if that’s not a worry today, the anxiety about that happening next month or the month after is just as profound as for someone who doesn’t have money now. This uncertainty around what will happen with those relief measures is very significant and causing lots of anxiety.”
Beginning the Recovery Process
The economy, and its workers, will take time to bounce back from the economic recession caused by the coronavirus, which officially began in February. But many economists are optimistic with the beginnings of recovery across the country as businesses reopen and economic activity returns, even predicting we could already be moving into stages of economic expansion.
But the sectors of the economy that were hit the hardest, such as entertainment and travel, are expected to recover much more slowly. “Those parts of the economy will be challenged until people feel really safe again,” Jerome Powell, chairman of the Federal Reserve, said in an interview with “60 Minutes” in May.
Fifty-nine percent of survey respondents predict that it will take at least six months for the economy to return to normal, and another 13% expect that the normal we knew before the outbreak occurred will never return.
“For everyone, it’s important to have that awareness of what you can control and what you cannot control,” Dunkle says.
“Take the steps to do things that are under one’s control and then realize there’s many factors that aren’t under our control.
Nobody really knows the future course of this virus and when things will feel more normal again and when the economy will feel as though it’s recovered significantly.”
How soon do you expect the economy to return to normal (i.e. similar to before the pandemic)?
Note: Percentages may not total 100 due to rounding. “Never” indicates respondents who do not expect the economy will return to normal.
This moment in time and the uncertainty it brings is a turning point, both personally and systemically, experts say.
“There’s some authors in the financial therapy realm who talk about financial flash points,” Dunkle says. “That is something related to money that happens to us and really sticks with us, affecting us for years to come. I think this is going to be a financial flash point for many people, especially the ones who have had the trauma of suddenly losing their job and feeling very insecure.”
Dunkle recommends regularly practicing self-care and other healthy coping mechanisms, such as exercise, social interactions, and other things that you find enjoyable, to build resilience to face lasting uncertainties. She also suggests talking to your doctor if your anxiety becomes debilitating.
“This is all still happening,” Clayman says. “The reverberations to our society and our economy are going to be felt for a long time. We should be gentle with ourselves in terms of holding space to just be in the discomfort of not knowing, which is really hard for a lot of us to do.”
For Gabriella Braddock, not knowing what the future holds remains stressful, but she’s hopeful for recovery.
Everything 2020 has thrown the couple’s way has only shown what they’re capable of, “but we need to be resourceful and we need to plan,” she says. “That’s what’s going to help me more in the long run. We can overcome any challenge, but we need to prepare a lot more than we ever thought we would have to financially.”
NextAdvisor commissioned YouGov Plc to conduct the survey. All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 2,562 U.S. adults (age 18+). Fieldwork was undertaken June 1–3.
The survey was carried out online and meets rigorous quality standards.
It employed a non-probability-based sample using both quotas up front during collection, then a weighting scheme on the back end designed and proven to provide nationally representative results.