New Research: Emergency Savings

A Life Jacket in the COVID Economic Crisis

Commonwealth

Commonwealth’s Financial Resilience Project: COVID Stories, Rapid Insights closely tracks the financial lives of low- and moderate-income households over the course of several months. Our project follows 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.

Starting in mid-June, Commonwealth began interviewing households living on LMI every other week to better understand the tools and strategies people are using to achieve financial resilience now. We are tracking how people are earning money, paying bills, using savings, and managing debt. We are particularly interested in the role of savings—examining what households had accumulated before COVID-19, as well as the opportunities to save during the crisis. More importantly, our discussions allow us to identify what actions institutions can take to reinforce financial resilience today, and what system designs will enable resilience in future economic crises.

Emergency Savings: A Life Jacket in Rough Seas, the second in our Financial Resilience Project brief series, shares our latest insights on how people are using emergency savings during the crisis. Some of our key findings:

  • Households with just one month of income in emergency savings were able to better weather the dramatic income shock they experienced in the first months of the pandemic.
  • Some households tried to start saving during the crisis, but found it difficult to sustain a new saving habit for a variety of reasons.
  • Unemployment overshadows savings—those who are unemployed are focused on job seeking and other pressing financial concerns, making it challenging to save even when they have more income.

Read Emergency Savings: A Life Jacket in Rough Seas to learn how emergency savings are keeping people afloat and how policymakers, financial institutions, and employers can support low- and moderate-income households build financial resilience through savings both now and beyond COVID.

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