The COVID-19 recession has exacerbated the financial challenges faced by millions of Americans before the pandemic, including volatile income and expenses, and a lack of tools to effectively manage that volatility. Our interviews over the last few months show that households with emergency savings going into the crisis were better prepared, even if they faced extreme income volatility.
We also found that people who were habitual savers before the pandemic were able to continue saving unless they lost their job. Additionally, some households that received additional income tried to start to save during the crisis, but struggled to change their financial habits in the midst of a Crisis.
Based on our research, it is clear that having savings matters in times of extreme volatility. Households need the support of employers, financial institutions, fintechs, and policymakers to build a saving habit and to maintain it in moments of crisis.