How Covid Has Changed American Perspectives on Wealth and Finances

According to Charles Schwab’s 2020 Modern Wealth Survey, an annual examination of perspectives on saving, spending, investing and wealth, 57 percent of Americans say that they or a close family member have been financially impacted by COVID-19, but at the same time, there are some silver linings when it comes to people’s financial behaviors.

Thirty-six percent of Americans say they are more likely to have savings to cover emergency expenses, and 40 percent say they are more likely to be saving more in general compared to before the pandemic outbreak in the U.S. Twenty-four percent say they are now more likely to have a financial plan, and while around 30 percent of those surveyed express some apprehension about investing, roughly one in five say they are more likely to invest more in the stock market (19%) or start investing (22%) during this time.

Americans also report that their relationships drive their overall happiness more than twice as much as money, but they are concerned about their financial futures, with only one quarter feeling highly confident about reaching their financial goals – down from one-third when surveyed in January 2020.

Schwab’s 2020 Modern Wealth Survey is comprised of data gathered from 1,000 respondents in January 2020 before the widespread COVID-19 outbreak in the U.S., and again in June 2020.

“The pandemic and the uncertainty it’s causing are changing how people think about their wealth and planning for the future, but we’re seeing a very productive investor reaction in many ways,” says Jonathan Craig, senior executive vice president, Schwab Investor Services. “In both our survey results and the client behavior we’ve observed since March, we’re seeing a high percentage of people engage with their money and investments, and in many cases seek more help and guidance to make sure they’re on the right track.”

COVID-19 recalibrates American financial aspirations: less is more

Americans have begun to think differently about the value of their money, and their comfort level is changing. When asked what it takes to be financially comfortable now, Americans say it takes much less than it did in January – respondents cited an average of $655,000 in net worth when surveyed in June 2020, down nearly 30 percent from January 2020 when their comfort level stood at an average of $934,000. The bar for the level of assets that Americans think it takes to be considered wealthy has been lowered as well. Today they feel that an average of $2.0 million in net worth equates to wealth, down 23 percent from a loftier average of $2.6 million in January.

Financial stress is on the rise, especially among Millennials

In the midst of the COVID-19 pandemic, 30 percent of survey respondents say they or a family member have experienced a salary cut or reduced work hours, and 25 percent say either they or a family member have been furloughed or laid off. When it comes to impacts on salary and work hours, Millennials are the most affected of all generations, with 41 percent stating that they or a family member have experienced one of these issues.

When asked about their level of financial stress (on a scale of 0 to 100), Americans say they are nearly 15 percent more financially stressed today compared to the end of 2019 before the widespread COVID-19 outbreak in the U.S. Americans also indicate that their increasing stress levels might have a lasting effect. When asked to predict their level of financial stress once the pandemic subsides, they anticipate they will still be more financially stressed than prior to the outbreak of COVID-19.

Millennials are the most financially stressed generation at each point in time surveyed, while Baby Boomers are the least financially stressed.

Relationships and health remain the biggest drivers of overall happiness

Americans’ attitudes about money play a role in their overall happiness, but when asked about the most important factor to their overall happiness today, Americans say relationships are number one, followed by health and money – the same order as before the pandemic outbreak.

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