'A wake-up call:' It took a pandemic to convince many Americans to save for an emergency
The economic fallout brought on by the pandemic has motivated a majority of American investors to do the most fundamental personal finance task: Create an emergency fund, a new survey found.
Nearly two-thirds of investors (63%) with no emergency fund said they have or planned to sock away savings for the unexpected because of the health care crisis, according to an Ameriprise Financial survey of 3,000 Americans aged 30 to 70 with at least $100,000 in assets.
“The financial impacts of this pandemic have been uneven,” Marcy Keckler, Ameriprise’s vice president of financial advice strategy, told Yahoo Money. “But regardless of that, one of the things that is clear is that this experience has really been a wake-up call for all kinds of investors, and in a variety of different ways.”
The pandemic has motivated many to sharpen their financial focus in other areas, too, according to the survey. For instance, 56% plan to develop a retirement savings plan, 48% want to create household budgets, 44% intend to draft a will or estate plan, and 30% want to work with a financial advisor.
The survey revealed that people have used this opportunity to connect with their families regarding finances after COVID-19 served as a harsh reminder of the realities of death and unforeseen accidents.
Read more: Are you in the red or green when it comes to saving?
“This pandemic has been a trigger for some people to increase their communication about finances and money with the important people in their lives,” Keckler said. The survey found that more financial conversations are happening between parents and their children, siblings, and couples about their long-term financial decisions and goals.
“That's maybe a little bit of a silver lining in this pandemic experience that it can open up lines of communication,” Keckler said, “and get people talking about things that matter.” To her point, the events of the past year have caused people to explore the worst-case scenario situations and how those who depend on them will fare in their absence.
Over six out of 10 respondents now feel that protecting their assets is more important now than it was before the pandemic and a similar proportion responded that being financially prepared for unexpected events or uncertainty is more important to them today than before.
Read more: Here's what to do when your emergency fund runs out
Calling it a “striking shift” for the historical financial mindset for Americans, Keckler said “this pandemic really [has] caused them to think a little bit differently about their financial situation” and between 40% and 47% of people said that they expected those shifts to be long lasting.
The financial fundamentals of saving and investing still apply, but Keckler thinks “going through this pandemic experience has really emphasized that importance for people”
Stephanie is a reporter for Yahoo Money and Cashay, a new personal finance website. Follow her on Twitter @SJAsymkos.
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