Here’s where people are turning for cash as household income plummets

The economic impact of coronavirus has put a dent in Americans’ finances: Nearly 1 in 3 individuals has experienced a decline in income since the pandemic arrived.

Those are the results from a new survey from Bankrate.com. The personal finance website polled 2,653 adults online from April 29 through May 1.

Lockdowns and social distancing orders have forced businesses to close their doors and lay off or furlough workers.

More from Invest in You:
Three ways to make an uncertain income more certain 
Parents find it near impossible to make childcare plans in the pandemic  
This simple financial plan makes it easier to get through tough times 

Close to 3.2 million people filed an initial unemployment claim last week, bringing the total number of jobless workers to 33.5 million over the last seven weeks, the U.S. Department of Labor.

“This experience is much worse, much more sudden than the 2008 recession,” said Greg McBride, chief financial analyst at Bankrate.com.

“We’ve gone from the lowest unemployment in 50 years to the highest unemployment in 90 years,” he said. “The lion’s share of it happened in seven weeks.”

Households lucky enough to have built an emergency fund are turning to those pots of cash as the economy worsens.

Of those who lost income, 36% have drawn down from their emergency savings to get by, said McBride.

These individuals — who may have been laid off or furloughed — are three times as likely to tap their savings, he said.

“These things can happen without warning, and that’s why that emergency savings is so vital,” McBride said.

The standard rule of thumb is for individuals to have enough savings to cover at least three to six months’ worth of expenses.

However, the next concern on the horizon is whether workers’ savings will be enough to get them through a lengthy period of reduced income.

Consider that the extra $600 in unemployment income that laid-off workers are currently receiving will end on July 31.