Your Finances Caught Covid-19

Charles Schwab conducts an annual Modern Wealth survey that gathers data in January and June. This year’s results provide a unique look at how the Covid-19 outbreak has changed how we think about our money. Some results are obvious, others shine a light on what’s really important in our lives.


57% of Americans Financially Impacted by Covid-19

This is unsurprising. Every one of us can name impacted friends. Most of us have felt the impact ourselves in one way or another. Some have been hit hard, lost jobs, or are massively scrambling to reshape a small business to survive.

We’re More Worried About Reaching our Goals

The percentage of respondents who were “very confident” about reaching their financial goals dropped from 33% to 25%. This one is also unsurprising, so let’s jump to the interesting ones….

We Need Less to be Financially Comfortable

How much Net Worth do you need to be “financially comfortable,” and how much do you need to feel “wealthy”? Think about this for a moment. How would you answer this question for yourself? (If you don’t know your Net Worth, setup a call and I’ll quickly help you calculate it.) Everyone has a different “comfortable” or retirement number in their mind. So what’s yours? Did it change this year?

Between January and June, the US response for “financially comfortable” dropped from $934,000 to $655,000 – that’s 30%! The “wealthy” response also dropped 23%, from $2.6M to $2M. Now this is interesting. What’s going on here? Simply, 2020 has reshaped our lives and that’s reshaping how we spend and think about money. We’re spending less because our income dropped, because we can’t (the restaurant isn’t open), and because we’re not walking past Starbucks or the bagel cart on the way to work every day (we have less routine opportunity to spend). Not spending is causing all of us to think about what we don’t need to spend, and it’s changing how we think about it not just daily and weekly, but in the long run. What do I really need to feel comfortable or wealthy?

Lastly, Lifestyle Matters Less

The last question on the survey is a ranking of the factors that respondents say drives their happiness. Lifestyle dropped to 4th place from 3rd place on the list. This one is the puzzler. Did Lifestyle drop because we simply don’t have access to as much lifestyle spending? That is, did it drop temporarily, or is this a permanent change in how we think about what’s important to us, what makes us happy? What do you think, is it temporary or is it permanent? I’d love for you to email me and let me know your thoughts.

You can read the survey results for the entire US along with Los Angeles and Orange County here.

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