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As 6 million Americans slip into coronavirus related poverty, here's our financial advice

As 6 million Americans slip into coronavirus related poverty, here's our financial advice
(Image credit: Getty)

At least six million more Americans have fallen into poverty due to the impact of the coronavirus pandemic as the initial relief offered by the first stimulus measures has worn off. According to the latest Columbia University data, the monthly poverty rate in the US increased from 15% to 16.7% from February to September 2020, even after taking the Government’s response to the crisis into account. 

The research also suggests that the original CARES Act relief package - which included a $1,200 stimulus check for individuals and enhanced unemployment benefits of an additional $600 a week to try and help people avoid turning to payday loans and the like - had prevented 18 million families from going into poverty in March and April. However, with the unemployment supplement expiring in July and not yet replaced, and most people having already received and spent their coronavirus stimulus payment, the number fell to around four million individuals in August and September. The report adds that increases in poverty have been particularly acute for Black and Hispanic individuals, as well as for children.

Stimulus impact fades

The findings are supported by separate research from the University of Chicago and the University of Notre Dame which suggests that the number of Americans in poverty has increased by around six million over the three months to the end of September. 

“In this time of crisis, it is important for policymakers to respond as quickly as possible to address the needs of those hit hardest by the pandemic,” said the authors of the joint report. “Our results show that for low-income individuals and families, the government response to the pandemic more than offset the sharp decline in earnings early on in the pandemic. However, these gains appear to have faded as some of the benefits expire.”

As 6 million Americans slip into coronavirus related poverty, here's our financial advice

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Sadly, talks aimed at delivering a second stimulus check have stalled with the election in sight, and there’s been little progress towards an agreement on a replacement support package for those out of work too. For now, it seems those struggling to make ends meet must try to fend for themselves. But what measures can you take if you’re in financial difficulty?

Coping amid financial struggles

Budgeting carefully is obviously a must, but if you’re encountering money strife, it’s likely you’ll have cut any unnecessary spending back to the bone already. While specific coronavirus-related Government support might still be a little way down the track, remember that there are other benefits you might be able to claim, including the standard level of unemployment benefit should you be out of work. It’s also worth double checking if you might be owed a tax refund for this year, or any gone by, and using the best tax software to get your tax affairs up straight in case there’s money due to be returned to you. 

Of course, ensuring you retain a place to live and have food on the table should be a priority. So if you have savings put away for a rainy day, don’t be afraid to use them now. Perhaps speak to your family and friends to see if they can lend you money to help see you through, or if needs must, then using a credit card or taking out one of the best personal loans online are both viable options too. 

As 6 million Americans slip into coronavirus related poverty, here's our financial advice

(Image credit: Getty)

Should you have concern over paying your rent or meeting your mortgage payment, then you should get on the phone again too. The best mortgage lenders are being extra flexible amid borrower’s current struggles, while if you’re falling behind on your debt repayments for credit cards and loans, make them aware of your situation as well. 

While the temptation might be strong, try and resist taking out a payday loan to cover your financial shortfalls if you can, unless you’re certain you’ll be in a position to pay the money back fast, to avoid the high charges that they attract. Always check out the alternatives to a payday loan first, and consider these risky loans an option of near last resort.  

And if your exposure to debt is getting out of control, then taking action is a must. This might mean moving credit card debt to a 0% balance transfer card or talking to a debt counselor for advice. You should also check whether the best debt consolidation companies can be of help, by bringing all of what you owe together into a single and easier to manage loan.   

With over 20 years’ experience in the financial services industry, Tim has spent most of his career working for a financial data firm, where he was Online Editor of the consumer-facing Moneyfacts site, and regularly penned articles for the financial advice publication Investment Life and Pensions Moneyfacts. As a result, he has an excellent knowledge of almost areas of personal finance and, in particular, the retirement, investment, protection, mortgage and savings sectors.