People buy water, food and toilet paper at a store, as they begin to stockpile essentials from fear that supplies will be affected by the spread of the COVID-19, coronavirus, outbreak across the country, in Los Angeles, California on February 29, 2020.
Mark Ralston | AFP | Getty Images
Canned food is one thing. Cash is another.
As people in the United States prepare for the coronavirus to spread, many are hitting the grocery store and pharmacy.
However, what most Americans lack is enough savings on hand to weather a potential storm.
Emergency supplies aside, the majority, or 54%, of adults in this country are not financially ready for COVID-19 outbreak, according to a report from Prudential Financial.
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Nearly half of adults are worried that they will personally contract the coronavirus and fear quarantines will prevent them from working and getting paid, Prudential found.
Roughly 45% are also concerned about investment and retirement savings losses, a number that is up sharply in recent days. (The spread of the coronavirus helped to sink the Dow Jones Industrial Average more than 10% last week, marking its worst weekly performance since the financial crisis.)
“Uncertainties in the wake of crises like the coronavirus underscore the need for emergency savings and income protection, yet many workers fear for their financial security,” said Jamie Kalamarides, president of Prudential Group Insurance.
In its 2020 Financial Planning Survey, First National Bank of Omaha found that 49% of U.S. adults expect to be living paycheck to paycheck this year and 53% do not have an emergency fund that covers at least three months of expenses.
Just over 40% of Americans are able to cover an emergency room visit or other unexpected $1,000 expense with their savings, according to a separate financial security survey from personal finance website Bankrate.com.
“The number-one financial regret among Americans tends to be the failure to save for emergencies and for retirement,” said Mark Hamrick, the senior economic analyst for Bankrate. “This is a time when both of those objectives are quite relevant.”
How to build a cash reserve
Most financial experts recommend stashing at least a six-month cushion in an emergency fund — and more if you are the sole breadwinner in your family or in business for yourself.
To get there quickly, scale back your spending or switch to a debit card temporarily to keep purchases in check, then set up a direct deposit from your paycheck into a dedicated savings account.
To make the most of that money, snag a significantly higher savings rate by using a high-yield account.