The financial impacts of COVID-19 have been extensive — but the severity of the impact and the implications aren’t the same for everyone. While some have simply adjusted where and how they work, others are facing unemployment and struggling to pay bills. A recent study by TransUnion suggests some of the disparity falls along generational lines.
Once the dust settles, how will Gen Z fare compared to baby boomers? And how will millennials recover versus Gen X? There are some notable (and interesting) differences — not only in how each generation is struggling, but also in how they’re adapting to undeniably challenging circumstances.
The Current Impact
Conducted May 28 and 29, the TransUnion data shows a whopping 58% of respondents reported being financially impacted by the pandemic, and 23% reported losing their jobs.
According to a study conducted by HRDive, a human resource management software company, Gen Z and those new to the workforce are shouldering a larger number of layoffs compared to older generations. This may be because they make up a large portion of the hourly workforce and tend to have jobs in industries “that depend on foot traffic” — like those in the service and tourism industries.
In addition, a recent report by Data for Progress suggests millennials are also being disproportionately affected in part because they entered the workforce when the economy was reeling from the Great Recession, and according to Vox, they’re still feeling the effects of high student loan debt.
Data based on jobless claims in California puts baby boomers third on the list — behind Gen Z and millennials, but ahead of Gen X — for the most impacted. A study by the TransAmerica Center for Retirement Studies found baby boomers were“somewhat more likely” to have been furloughed compared to other generations, and 32% said confidence in their ability to retire comfortably has been negatively impacted by COVID-19.
The same study found Gen X was “somewhat more likely” to say their work has remained the same since the pandemic hit.
Bills and Budgeting
Data from TransUnion shows that while 70% of those impacted by the pandemic say they’re worried about their ability to take care of financial responsibilities, the bills they are most concerned about varied by generation.
Utility payments topped the list for Gen Z while millennials, Gen X, and baby boomers all cited credit card payments as their top concern. Gen Z was also more concerned about student loan payments than any other generation, while baby boomers cited medical bills as a higher concern relative to the other groups.
So how is each group weathering the storm?
According to the TransUnion data, all generations are first and foremost cutting back on discretionary spending. This is followed by cancelling subscriptions or memberships for Gen Z, millennials, and Gen X, while baby boomers are opting to cut back on saving for retirement.
A consensus was also reached when it comes to what purchase or event respondents would delay during this time, with the majority of generational groups saying vacation. This was followed by an auto purchase for Gen Z and home improvements for millennials, Gen X, and baby boomers.
Perhaps most surprisingly, significantly more respondents from Gen Z (72%) reported reaching out to lenders and creditors to discuss payment options than any other generation (compared to 66% of millennials, 57% from Gen X, and 36% of baby boomers).
Fraud and Credit Monitoring
Fraud is another unfortunate byproduct of COVID-19 (check out some of the top scams here), and the TransUnion data suggests all generations have felt the impact in various forms.
Overall, 29% say they’ve been the target or the victim of some form of digital fraud, but baby boomers report more instances of phishing scams and Gen Z report more instances of stimulus check scams. Gen Z also was more likely to have acted on and subsequently been the victim of the fraud they were targeted for, followed by millennials, Gen X, and finally, baby boomers (13%, 12%, 6%, and 1% respectively).
One way respondents are protecting their finances during this time is by monitoring their credit. Thirty-seven percent of all respondents said they believe keeping an eye on their credit is “very important” during the pandemic. Of that group, 56% said they check their scores “at least monthly.”
So what’s the generational breakdown when it comes to credit monitoring?
While the TransUnion study did not break down this data by generation, Discover’s Credit Health survey found an impressive 93% of millennials were aware of their credit score. This was compared to 79% of Gen X and 73% of baby boomers.
The reason for the generational differences could be because millennials are taking advantage of the free digital services — like Upturn — that make credit score monitoring easy.
Staying on Top of Your Credit
If you’re one of the many feeling the financial impact of COVID-19, there are at least a few reasons to stay on top of monitoring your credit.
- To confirm creditors are reporting your account information accurately.
Many lenders and creditors have offered deferment and forbearance programs to help those struggling during the pandemic. As part of these programs, they may agree to report your account to the CRAs as current (unless your account was already in default). Keeping an eye on your credit reports and credit scores can ensure whether this is, in fact, how it is reported.
- To ensure you are not the victim of identity theft or fraud.
As we’ve mentioned, identity theft and various other types of fraud are running rampant during this time. By paying attention to your credit you may be able to spot the fraud and address the impacts early.
- To spot and correct errors that could prevent you from accessing new lines of credit.
If you’re considering consolidating debt with a balance transfer credit card or personal loan, you may need to stay on top of monitoring and improving your credit.
Ready to get started? Sign up for Upturn (for free) here and you’ll be able to check your TransUnion credit report and credit score and dispute any errors you find. It’s that easy.
[Looking for ways to improve and protect your credit? Read our comprehensive guide.]