Commonwealth’s Financial Resilience Project: COVID Stories, Rapid Insights closely tracked the financial lives of low- and moderate-income households over the course of six months. Our project followed 56 households from 24 states across the United States to gain rapid insights in near real-time on how people living on low to moderate incomes (LMI) are navigating the crisis. Read more about the study here.

Since June, we have been talking with 56 households living on LMI about their financial lives. Conquering the Storm with Resilience: Key Success Factors, the final report in our Financial Resilience Project brief series, summarizes what we have learned through eight interviews in the second half of 2020. Our findings reveal:

• How the actions taken by governments and the private sector directly impacted individual low- and moderate-income households in our study.
• That their employment status, unemployment benefits, income, savings behavior, and coping strategies all varied greatly through the end of September.
• The key factors in their resilience through this crisis, which include: having savings at the start of this crisis; a belief in themselves—that they can handle this financial crisis; and their adaptability in deploying multiple different coping strategies.

The $900 Billion coronavirus relief legislation that Congress passed in December 2020 will provide additional relief for thousands of Americans living on lower incomes. However, based on the experiences of the households in this research study, it will likely fall short in similar ways to the first relief package that was passed in March 2020.

• The length of time of the extended benefits continues to be unrelated to the expected duration of the public health crisis and its economic fall out. For example, unemployment benefits are only extended through April 4, 2021. All predictions are that the economic recovery will take much longer.
• $25 Billion is allocated to be distributed through state and local government for emergency rental assistance but with no apparent provisions for funds for the state agencies who will have to administer these funds. Without money to administer these funds, states will likely once again be overwhelmed by the demand for assistance, causing significant delays in disbursement and, ultimately, leading to financial hardships for households.
• Millions of low-income workers will need to file their taxes before they can claim  their stimulus payments and expanded tax credits but the IRS has announced that they won’t be issuing tax refunds until March 1 for these filers. This leaves households with three months without these critical funds and may lead to additional debt.

Many households have spent 2020 unable to manage their finances because of the short-term and unpredictable course of the government response to the economic fallout of COVID-19. Although this new bill provides some relief, families will continue to face financial challenges as they navigate through this storm.

With virus case numbers resurging in the United States and unemployment rising, households face more uncertainty in 2021.

Institutions can support the resilience of lower-income households by creating products, services, experiences, and policies that are designed to build emergency savings and manage volatility while building on the strengths of agency and flexibility that these households are exhibiting.

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