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.

Households living on LMI have long used a range of financial coping strategies to manage their financial lives. These households employ savings when they can, live on strict budgets, and use bill prioritization as a financial management tool. All too often these households struggle to stay afloat, their coping strategies tested through successive financial crises, making them vulnerable to additional financial shocks.

In many ways, the current crisis is an extreme version of the volatility and uncertainty households living on LMI have always faced, but their coping strategies are now being tested in new ways. State-mandated shutdowns and the moratoriums on debt payments made some of these strategies easier to implement for these households. However, the financial challenges faced by these households is more than offset by these benefits. Millions of families continue to experience unemployment while additional supports (such as supplemental unemployment insurance benefits) are being reduced and are due to be eliminated; it is becoming increasingly difficult for these households to stay afloat.

This brief focuses on the households in our study that have experienced the most dramatic loss of income to understand which strategies they are employing and how. The brief also previews what is to come for families who have already lost jobs and are now facing a dramatic loss of income as supplemental unemployment benefits have expired and been replaced with a reduced and short-term benefit. The thousands of workers in the airline and hospitality industries who will likely be laid off in the fall will also face these challenges.

Financial Coping Strategies: How Households Are Staying Afloat During COVID-19, the third in our Financial Resilience Project brief series, shares our latest insights on how households that have experienced dramatic and sustained loss of income are staying afloat. Some of our key findings:

• Households employed three strategies the most: using accumulated savings, missing bills, and reducing expenses.
• Households tended to employ two strategies at a time due to the complexity of their lives and of managing multiple strategies.
• As the crisis continues, missing bills or accumulating debt will have long-term negative impacts on household finances.

Read the brief to learn how households are using these coping strategies to stay afloat and the considerations for policymakers, financial institutions, and employers seeking to support these households in building financial resilience now and beyond COVID.

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