A Snapshot: Everyone’s Finances Just Changed
Written by The Clearcover Team | 4 minute read
COVID-19 has made 2020 a very different year for Clearcover—and the rest of the world. Our team has spent the last few weeks figuring out how to navigate this new landscape and how best we can evolve to meet the challenges. We—along with the entire insurance industry—are adjusting our strategies, approaches, and expectations every day.
Our team has had many conversations and shared many ideas about what this pandemic might mean for day-to-day financial decisions and the industry as a whole. We also leaned into one of the cornerstones of our brand, which is to not make assumptions about what people want or need but instead to ask them.
So that’s what we decided to do. We ran a survey to see exactly how Americans are reacting financially to the COVID-19 crisis. We wanted to know how global uncertainty is affecting the very specific decisions we’re all making each day regarding where our money goes—and where it doesn’t. Here’s what we found.
[Please note this survey was meant to better understand the broader financial implications of the pandemic. If you’re a customer and struggling with payments due to the economic slowdown of COVID-19, please call us or contact us in the Clearcover app so we can help you 1:1.]
Over half of the U.S. is now experiencing some form of job insecurity.
You’ve already seen unemployment in the headlines—and you may have already been affected by it personally—so it won’t be surprising to know that Americans are really worried about their jobs. Still, the numbers we found are sobering. 11% of the respondents in our survey had lost their job in the last three weeks due to COVID-19. And 50% of respondents were worried about losing their employment because of the pandemic.
Put together, that means 6 out of 10 respondents were concerned about how they’ll pay the bills in the near future.
These are difficult numbers. And they say a lot about how we’ll all be thinking about money in the weeks to come, which leads us to the next insight.
Basically everyone is making significant spending adjustments.
This economic uncertainty is having a big effect on all of our budgets. 84% of our respondents stated that, due to the pandemic, they’re scaling back spending in categories deemed nonessential. For example, 19% stated that they’re cutting back on entertainment costs, 10% are cutting streaming services and gaming costs, and 26% are cutting retail spending. Even the food budget is getting a second look—1 in 10 of our respondents stated they’re spending less on groceries.
But budget cuts are only part of the picture—some Americans are increasing spending in certain categories. For example, 34% of our respondents stated that they’re actually increasing their grocery budget, and 9% are increasing their spend on streaming services and gaming. And those adjustments make a lot of sense as we all adjust to our new normal—staying home 24/7.
The takeaway: household budgets are shifting pretty dramatically—at least in the short-term. 58% of respondents said that they intended to maintain these adjusted budgets for 2-6 months.
U.S. parents are being hit hardest by the pandemic economy.
Budget management is critical for everyone but no more so than families - parents are 10% more likely to be cutting back on spending. However, their budget allocation differs from the group of non-parents.
While this group is 51% less likely to be cutting back on groceries and 30% less likely to cut back on media services, they are pulling funds from different areas. More than half of parents say they are significantly cutting their budgets in the following areas: retail shopping (82%), restaurant takeout (73%), and entertainment (57%).
The younger generation is also taking the economic downturn seriously.
For many millennials, this is the second major economic downshift in their adult life—and they’re reacting accordingly. 86% of millennials stated that they’re cutting spending—versus 77% of people over 55. And younger people seem to be expecting a longer downturn than their parents and grandparents: millennials were 60% more likely than people over 55 to state that they plan to make spending cuts for at least 6 months. (And this makes sense to us—there’s evidence to suggest that younger people are uniquely exposed to economic hardship this time around.)
People are looking to car insurance and other required expenses as likely places for budget cuts.
Finally, we asked how people feel about car insurance costs since that’s where we know Clearcover can make a unique impact in the days ahead. And here’s a big number for our industry: 1 in 3 respondents stated that they’d be looking to car insurance to help them save money during the pandemic. And over 1 in 10 stated that, due to COVID-19, they’d be shopping around for a better price on car insurance in the near future. A small percentage of respondents even stated that they planned to cancel their car insurance in order to ease their financial burden.
These are significant figures, and they make sense. At a time like this, even the most basic expenses get a review, and looking around for a lower price on essential services can be a great way to cut costs (there are apps like Trim that can even automate it.)
We’re here—and we’re listening
As we've been working through these challenges, we’ve also been thinking about what kind of support our customers might need during this difficult time. This article was meant for the broader insurance industry but if you’re a customer and reading this, please reach out to us if you’re going through financial hardship due to COVID-19. We’re here to help.
Everyone is figuring this out at the same time, and we’ll get through it as best as we can. For now, know that we at Clearcover are actively listening to your concerns so we can best respond to your needs during this time.
We’ll be in touch soon with more information about how you can cut your car insurance costs—without making any costly errors.
We polled +600 U.S. residents on their personal finance implications during the COVID-19 pandemic. The survey was conducted at 95% confidence, +/- 4% margin of error.
